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Monetary policy in a currency union with heterogeneous limited asset markets participation

Abstract:

This paper examines monetary policy in a currency union whose member countries exhibit heterogneous rates of limited asset markets participation (LAMP). As a result risk sharing among member countries is imperfect and the monetary transmission mechanism can differ across countries. In the limit the elasticity of output to the union-wide nominal interest rate can be of opposite sign in different countries. I develop a tractable model in which the dispersion of asset markets participation (A...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2009-11-01
Paper number:
2009-W16
Keywords:
Pubs id:
1143972
Local pid:
pubs:1143972
Deposit date:
2020-12-15

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