IDEAS home Printed from https://ideas.repec.org/p/fip/fedgif/279.html
   My bibliography  Save this paper

The prospect of a depreciating dollar and possible tension inside the EMS

Author

Listed:
  • Jacques Melitz

Abstract

This paper analyses the possibility of increased tensions in the European Monetary System (EMS) as a result of the recent dollar depreciation. The analysis employs a static, fairly stylized macroeconomic model in which the EMS is characterized as a means of achieving a cooperative outcome even though policymakers in member countries weigh output-inflation tradeoffs differently. Compared with the Nash (noncooperative) equilibrium, such cooperation is shown to have been welfare-improving for member countries before the depreciation of the dollar began. However, the inflationary consequences of the dollar depreciation in Europe give rise to the possibility that even if there is an optimal realignment afterwards, the members will not be able to achieve a better output-inflation tradeoff within the EMS than outside of it.

Suggested Citation

  • Jacques Melitz, 1986. "The prospect of a depreciating dollar and possible tension inside the EMS," International Finance Discussion Papers 279, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:279
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/ifdp/1986/279/default.htm
    Download Restriction: no
    File URL: http://www.federalreserve.gov/pubs/ifdp/1986/279/ifdp279.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ulrich Camen & Hans Genberg & Michael Salemi, 1991. "Asymmetric monetary policies? the case of Germany and France," Open Economies Review, Springer, vol. 2(3), pages 219-236, October.
    2. F. Van der Ploeg, 1992. "Coordinación de políticas macroeconómicas en las diferentes etapas de la integración económica y monetaria en Europa," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 24(03), pages 240-286.

    More about this item

    Keywords

    Dollar; American;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgif:279. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.