In the paper we show that common currency areas tend to amplify the inefficiencies associated with lack of credibility of monetary policy. Lack of commitment in redistribution of seigniorage leads to excessive inflation and suboptimal taxation in the Monetary Union. Lack of commitment to inflation creates multiple inefficient equilibria that do not exist in a regime of national monetary independence.
Bottazzi Laura, Manasse Paolo Luciano Adalberto. (2002). Credibility and seigniorage in a common currency area. JOURNAL OF MONEY, CREDIT, AND BANKING, 34(4), 1034-1046 [10.1353/mcb.2002.0052].
Credibility and seigniorage in a common currency area
Bottazzi Laura;Manasse Paolo Luciano Adalberto.
2002
Abstract
In the paper we show that common currency areas tend to amplify the inefficiencies associated with lack of credibility of monetary policy. Lack of commitment in redistribution of seigniorage leads to excessive inflation and suboptimal taxation in the Monetary Union. Lack of commitment to inflation creates multiple inefficient equilibria that do not exist in a regime of national monetary independence.File in questo prodotto:
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