International Economics and Economic Policy

, Volume 6, Issue 4, pp 421–443 | Cite as

(De-)Stabilizing two-country macroeconomic interactions in an estimated model of the U.S. and the Euro Area

  • Christian R. ProañoEmail author
Original Paper


In this paper a semi-structural macroeconomic model based on gradually adjusting wages and prices and hybrid, cross-over inflation expectation formation is analyzed and estimated with aggregate data of the U.S. and the Euro Area. Besides comparing, among other things, the determinants of the wage- and price inflation dynamics in both economies, the role of different macroeconomic transmission channels for the stability of the two-country system is investigated.


(D)AS-AD Monetary policy International transmission mechanisms Wage- and price inflation dynamics Instability 

JEL Classifications

E12 E31 F41 



I would like to thank Peter Flaschel, Willi Semmler and Heike Joebges for the many helpful discussions and comments, as well as two anonymous referees for many valuable suggestions on a previous draft of this paper.


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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Macroeconomic Policy Institute (IMK)DüsseldorfGermany

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