Titlebook: Economic Policy in a Monetary Union; Michael Carlberg Book 2000 Springer-Verlag Berlin Heidelberg 2000 Fiskalpolitik.Geldpolitik.Policy Mi

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CLAP

Wage Shocks an intermediate analysis of the small country in the large monetary union, say the Netherlands. In this section we assume markup pricing. That is, an increase in Dutch money wages causes a proportionate increase in the price of Dutch goods. Now imagine a 1 percent increase in Dutch money wages. The

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The Small Union as a Wholetput, as is well known. Moreover, the depreciation of the euro raises consumer prices, thereby lowering consumer real wages. In this chapter we pursue the elasticity approach. To illustrate this, consider a numerical example. A 1 percent increase in union money supply causes a 4.5 percent depreciati

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The Small Country in the Large Union Again, let the world multiplier be 1/2s. It proves useful to argue in the numerical example with c = 0.72 and k = 0.25. Further, let the marginal import rate of the Netherlands be 0.4. Then, as a finding, an increase in Dutch government purchases of l00 causes an increase in Dutch income of 147 (cf

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