Optimal currency areas with labor market frictions
By: Kekre, Rohan
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Material type: 
BookPublisher: American Economic Journal: Macroeconomics Description: 14(2), Apr, 2022: p.44-95.
In:
American Economic Journal: MacroeconomicsSummary: I study efficiency and optimal monetary policy in a two-country monetary union with frictional labor markets. With heterogeneity in labor market frictions, the constrained efficient allocation generically cannot be achieved even if productivity shocks affecting each country are the same. The second-best optimal policy targets smaller inflation and output gaps in the more sclerotic labor market. A quantitative calibration to the eurozone implies welfare gains from redefining the union's inflation target to put more weight on its sclerotic members. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 14(2), Apr, 2022: p.44-95 | Available | AR126964 |
I study efficiency and optimal monetary policy in a two-country monetary union with frictional labor markets. With heterogeneity in labor market frictions, the constrained efficient allocation generically cannot be achieved even if productivity shocks affecting each country are the same. The second-best optimal policy targets smaller inflation and output gaps in the more sclerotic labor market. A quantitative calibration to the eurozone implies welfare gains from redefining the union's inflation target to put more weight on its sclerotic members. – Reproduced
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