Title: Monetary policy design and transmission asymmetry in EMU: Does uncertainty matter?
Authors: De Grauwe, Paul ×
Senegas, M #
Issue Date: 2006
Publisher: VVF
Series Title: European journal of political economy vol:22 issue:4 pages:787-808
Abstract: In this paper, we consider how uncertainty affects the choice between federal monetary policy based on national and union-wide aggregate data under conditions of asymmetry in the transmission of monetary policy. We find that the uncertainty about the transmission process sustains (and, in some cases, even reinforces) the need to take into account information about national economies in the formulation of monetary policy. Also the forecasting process matters when uncertainty is additive: in particular, when union-wide forecasting is more accurate than national-based forecasting, this advantage can compensate for the welfare loss from using union-wide aggregation. There is, however, a strong case for using national information in the optimal design of common monetary policy.
ISSN: 0176-2680
VABB publication type: VABB-1
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of International Economics, Leuven
× corresponding author
# (joint) last author

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