Abstract
The world consists of two monetary regions, say Europe and America. The exchange rate between Europe and America is flexible. So far, in Parts Two and Three, we assumed that European goods and American goods were imperfect substitutes for each other. Now, in Part Four, we assume that there is a single good in the world economy. This good is produced in both Europe and America. Apart from this we take the same approach as before. Wages are flexible. European labour demand equals European labour supply. And American labour demand equals American labour supply. As a consequence, there is full employment in Germany, France and America. N1 denotes German labour supply, N2 is French labour supply, and N3 is American labour supply. German, French and American labour supply are given exogenously (N1 = const, N2 = const).
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© 2002 Springer-Verlag Berlin Heidelberg
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Carlberg, M. (2002). The Monetary Union of Two Countries. In: Inflation in a Monetary Union. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-24759-3_12
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DOI: https://doi.org/10.1007/978-3-540-24759-3_12
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-07769-2
Online ISBN: 978-3-540-24759-3
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