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Inhaltsverzeichnis

Frontmatter

Introduction

Introduction

Abstract
This book explores the new macroeconomics of the European Monetary Union. It carefully discusses the effects of shocks and policies on employment and prices. This book takes new approaches that are firmly grounded on modern macroeconomics. Throughout, for instance, it applies the rate-of-growth method. This method, together with suitable initial conditions, proves to be very powerful.
Michael Carlberg

The Small Union as a Whole

Frontmatter

Chapter 1. Fixed Money Wages

Abstract
Consider for example an increase in union money supply. Then what will be the effect on the union exchange rate, and what on union output? Alternatively consider an increase in union government purchases, union money wages, or union productivity. The monetary union is a small open economy with perfect capital mobility. For the small union, the world interest rate is given exogenously rf = const. Under perfect capital mobility, the union interest rate agrees with the world interest rate r = rf. Therefore the union interest rate is constant, too. The exchange rate between the monetary union and the rest of the world is flexible.
Michael Carlberg

Chapter 2. Flexible Money Wages

Abstract
Take for instance an increase in union money supply. Then what will be the effect on union money wages, and what on the price of union goods? Alternatively take an increase in union government purchases, union labour supply, or union productivity. Under flexible money wages, union labour demand coincides with union labour supply. As a consequence, there is always full employment in the union. Here N denotes union labour supply. It is assumed that union labour supply is given exogenously N = const.
Michael Carlberg

Chapter 3. Slow Money Wages

Abstract
Producer price inflation refers to the price of union goods. Consider for example an increase in union money supply. Then what will be the time paths of union money wages and of the price of union goods? And what will be the time path of producer price inflation? Likewise consider an increase in union government purchases or union labour supply. Again what will be the resulting time paths? Conversely, what monetary policy is needed to fight inflation? And what would be the effects of downwards sticky wages?
Michael Carlberg

The Small Union of Two Countries

Frontmatter

Chapter 1. Fixed Money Wages

Abstract
In this chapter we consider a monetary union of two countries, let us say Germany and France. Take for instance an increase in German government purchases. Then what will be the effect on German output, and what on French output? Alternatively, take an increase in union money supply, German money wages, or German productivity.
Michael Carlberg

Chapter 2. Flexible Money Wages

Abstract
Consider for example an increase in German government purchases. Then what will be the effect on the price of German goods, and what on the price of French goods? Alternatively consider an increase in union money supply, in German labour supply, or in German productivity.
Michael Carlberg

Chapter 3. Fixed Money Wages in Germany, Flexible Money Wages in France

Abstract
Consider for example an increase in union money supply. Then what will be the effect on German output, and what on the price of French goods? Alternatively consider an increase in German government purchases, French government purchases, German money wages, or French labour supply.
Michael Carlberg

Chapter 4. Slow Money Wages

Abstract
In this chapter, money wages are assumed to be slow. Here the focus is on producer price inflation in Germany and France, respectively. Producer price inflation in Germany refers to the price of German goods. And producer price inflation in France refers to the price of French goods. Take for example an increase in German government purchases. Then what will be the time paths of German money wages and the price of German goods? What will be the time paths of French money wages and the price of French goods? Further, what will be the time path of inflation in Germany? And what will be the time path of inflation in France? Alternatively, take an increase in union money supply. Conversely, what monetary policy is needed to fight inflation in the union? And what would be the effects of downwards sticky wages?
Michael Carlberg

Chapter 5. Different Behavioural Functions

Abstract
In the preceding chapters we assumed that union countries had the same behavioural functions. In the current chapter, instead, we assume that union countries differ in behavioural functions. Consider for example an increase in union money supply. Then what will be the effect on German output, and what on French output? In solving this problem it is helpful to discuss three cases:
  • Union countries differ in the income sensitivity of money demand.
  • Union countries differ in the propensity to consume.
  • Union countries differ in the degree of openness.
Michael Carlberg

The World as a Whole

Frontmatter

Chapter 1. Fixed Money Wages

Abstract
Understanding the world as a whole is helpful in understanding the world of two regions. Consider for example an increase in world investment. Then what will be the effect on the world interest rate, and what on world output? Alternatively, consider an increase in world money supply, world money wages, or world productivity. Of course, the world economy is a closed economy.
Michael Carlberg

Chapter 2. Flexible Money Wages

Abstract
Consider for example an increase in world money supply. Then what will be the effect on world money wages and world prices? Alternatively consider an increase in world investment, world labour supply, or world productivity.
Michael Carlberg

The World of Two Regions

Frontmatter

Chapter 1. Fixed Money Wages

Abstract
In this chapter we consider a world of two regions, let us say Europe and America. Take for example an increase in European money supply. Then what will be the effect on European output, and what on American output? Alternatively take an increase in European investment, European money wages, or European productivity.
Michael Carlberg

Chapter 2. Flexible Money Wages

Abstract
Consider for example an increase in European money supply. Then what will be the effect on the price of European goods, and what on the price of American goods? Alternatively consider an increase in European investment, in European labour supply, or in European productivity.
Michael Carlberg

Chapter 3. Fixed Money Wages in Europe, Flexible Money Wages in America

Abstract
Consider for example an increase in European money supply. Then what will be the effect on European output, and what on the price of American goods? Alternatively, consider an increase in American money supply, European investment, American investment, European money wages, or American labour supply.
Michael Carlberg

Backmatter

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