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MACROECONOMIC DIFFERENTIALS AND ADJUSTMENT IN THE EURO AREA. ESRI Research Bulletin 2009/3/1

Siedschlag, Iulia (2009) MACROECONOMIC DIFFERENTIALS AND ADJUSTMENT IN THE EURO AREA. ESRI Research Bulletin 2009/3/1. UNSPECIFIED.

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    Abstract

    In a monetary union such as the Euro Area, monetary policy can only address common shocks. Adjustment to asymmetric shocks – country specific shocks or common shocks which affect countries in different ways – cannot take place through monetary policy, nominal interest rates or exchange rates but must take place through other mechanisms. Theory suggests four main channels through which equilibrium can be restored: a) market-driven price and output adjustment; b) policy induced fiscal adjustment; c) risk-sharing against country-specific shocks through fiscal transfers and financial integration; and d) labour mobility.

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    Item Type: Other
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Research Bulletin
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 12 Sep 2019 12:58
    Number of Pages: 3
    Last Modified: 12 Sep 2019 12:58
    URI: http://aei.pitt.edu/id/eprint/98529

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