Citation

Discussion Paper Details

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Title: Exchange Rate Systems and Macroeconomic Stability

Author(s): Fabrice Collard and Harris Dellas

Publication Date: April 2001

Keyword(s): Flexible Exchange Rate, International Business Cycle Transmission, Monetary Union, Taylor Rules and Unilateral Exchange Rate Pegging

Programme Area(s): International Macroeconomics

Abstract: We examine macroeconomic stability and the properties of the international transmission of business cycles under three exchange rate systems: a flexible, a unilateral peg and a single currency. The subjects of study are Germany and France. EMU increases output and decreases inflation variability in Germany but it has the opposite effect in France. It induces a strong negative international transmission of country specific supply shocks and amplifies the role of German supply shocks. These two facts may complicate ECB policy-making.

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Bibliographic Reference

Collard, F and Dellas, H. 2001. 'Exchange Rate Systems and Macroeconomic Stability'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2768