Modelling shocks and adjustment mechanisms in EMU
The EMU study by Dr Peter Westaway Modelling shocks and adjustment mechanisms in EMU applies a new stylised model to analyse adjustment processes in and out of EMU with possible UK entry in mind. Outside EMU, UK interest rates are available to respond to economic shocks and the bilateral nominal sterling-euro exchange rate is free to vary; inside EMU, UK interest rates would be determined by the European Central Bank’s single monetary policy and the bilateral sterling-euro exchange rate would be irrevocably fixed. The study considers how the UK’s macroeconomic costs of adjustment to economic shocks compare inside and outside of EMU.
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Modelling shocks and adjustment mechanisms in EMU
PDF file of Executive Summary (92kb)
PDF file of Chapters 1 -5 (462kb)
PDF file of Chapters 6 - 9; references, annex A (292kb)