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Dynamika inflácie v krajinách monetárnej únie: jej vplyv na spoločnú hospodársku politiku
[Inflation Dynamics in Countries of the Monetary Union: What is its Impact on the Common Economic Policy?]

Author

Listed:
  • Patrik Kupkovič

Abstract

This paper studies the impact of inflation dynamics on a common economic policy in the monetary union using a small New Keynesian model of the monetary union. We are considering two open economy versions of the Phillips curve: a typical New Keynesian Phillips curve with only forward looking dynamics and a hybrid New Keynesian Phillips curve with forward and backward looking dynamics. The main findings are as follows: (i) the backward looking dynamics (persistence) of inflation in the Phillips curve is an important determinant of the common economic policy in the monetary union; (ii) in the case of asymmetric dynamics of inflation in the monetary union countries, the country with more persistent inflation dynamics has a significant impact on the common economic policy.

Suggested Citation

  • Patrik Kupkovič, 2017. "Dynamika inflácie v krajinách monetárnej únie: jej vplyv na spoločnú hospodársku politiku [Inflation Dynamics in Countries of the Monetary Union: What is its Impact on the Common Economic Policy?]," Politická ekonomie, Prague University of Economics and Business, vol. 2017(1), pages 62-81.
    • Handle: RePEc:prg:jnlpol:v:2017:y:2017:i:1:id:1127:p:62-81
    DOI: 10.18267/j.polek.1127
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    References listed on IDEAS

    as
    1. Celsa Machado & Ana Paula Ribeiro, 2010. "Monetary and Fiscal Policy Interactions in a Monetary Union with Country-size Asymmetry," CEF.UP Working Papers 1003, Universidade do Porto, Faculdade de Economia do Porto.
    2. Lukas Vogel & Werner Roeger & Bernhard Herz, 2013. "The Performance of Simple Fiscal Policy Rules in Monetary Union," Open Economies Review, Springer, vol. 24(1), pages 165-196, February.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Roberts John M., 2005. "How Well Does the New Keynesian Sticky-Price Model Fit the Data?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-39, September.
    5. David N. DeJong & Chetan Dave, 2011. "Structural Macroeconometrics Second Edition," Economics Books, Princeton University Press, edition 1, number 9622.
    6. Ferrero, Andrea, 2009. "Fiscal and monetary rules for a currency union," Journal of International Economics, Elsevier, vol. 77(1), pages 1-10, February.
    7. Bodenstein, Martin & Guerrieri, Luca & LaBriola, Joe, 2019. "Macroeconomic policy games," Journal of Monetary Economics, Elsevier, vol. 101(C), pages 64-81.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    typical New Keynessian Phillips curve; hybrid New Keynesian Phillips curve; economic policy; Monetary union;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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