For ease of exposition we make the following assumptions. The monetary union consists of two countries, say Germany and France. The member countries are the same size and have the same behavioural functions. An increase in European money supply raises producer inflation in Germany and France, to the same extent respectively. Here producer inflation in Germany refers to the price of German goods. Similarly, producer inflation in France refers to the price of French goods.
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© 2008 Springer-Verlag Berlin Heidelberg
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(2008). Monetary Policy in Europe. In: Inflation and Unemployment in a Monetary Union. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-79301-4_2
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DOI: https://doi.org/10.1007/978-3-540-79301-4_2
Publisher Name: Springer, Berlin, Heidelberg
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