Inflation and Unemployment in a Monetary Union

1. Front Matter

   Pages I-XV

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2. The Rate of Inflation

   1. Introduction

      Pages 1-7

   2. Monetary Policy in Europe

      Pages 11-18

   3. Fiscal Policies in Germany and France

      Pages 19-24

   4. Central Bank and Governments Decide Sequentially

      Pages 25-31

   5. Central Bank and Governments Cooperate

      Pages 32-36

   6. The Countries Differ in Size

      Pages 37-40

   7. The Countries Differ in Behaviour

      Pages 41-44

   8. The Monetary Union of Three Countries

      Pages 45-48

3. The Rate of Unemployment

   1. Monetary Policy in Europe

      Pages 51-58

   2. Fiscal Policies in Germany and France

      Pages 59-64

   3. Central Bank and Governments Decide Sequentially

      Pages 65-71

   4. Central Bank and Governments Cooperate

      Pages 72-76

   5. The Countries Differ in Size

      Pages 77-80

   6. The Countries Differ in Behaviour

      Pages 81-84

   7. The Monetary Union of Three Countries

      Pages 85-88

4. Inflation and Unemployment

   1. The Model

      Pages 91-97

   2. Some Numerical Examples

      Pages 98-108

   3. Monetary Policy in the Phillips Curve Diagram

      Pages 109-111

5. Inflation and Unemployment

   1. Monetary Policy in Europe

      Pages 115-126

This book studies the coexistence of inflation and unemployment in a monetary union. The focus is on how to reduce the associated loss. The primary target of the European central bank is low inflation in Europe. The primary target of the German government is low unemployment in Germany. And the primary target of the French government is low unemployment in France. The European central bank has a quadratic loss function. The same applies to the German government and the French government. The key questions are: To what extent can the sequential process of monetary and fiscal decisions reduce the loss caused by inflation and unemployment? Is monetary and fiscal cooperation superior to the sequential process of monetary and fiscal decisions? The present book is part of a larger research project on European Monetary Union, see the references given at the back of the book. Some parts of this project were presented at the World Congress of the International Economic Association, at the International Conference on Macroeconomic Analysis, at the International Institute of Public Finance, and at the International Atlantic Economic Conference. Other parts were presented at the Macro Study Group of the German Economic Association, at the Annual Meeting of the Austrian Economic Association, at the Göttingen Workshop on International Economics, at the Halle Workshop on Monetary Economics, at the Research Seminar on Macroeconomics in Freiburg, at the Research Seminar on Economics in Kassel, and at the Passau Workshop on International Economics.

• European Monetary Union
• Fiscal Policy
• Inflation
• Monetary Policy
• Unemployment

• Helmut Schmidt University Hamburg Federal University of Hamburg, Hamburg, Germany

  Michael Carlberg

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