Abstract
The model of unemployment and inflation can be characterized by a system of four equations:
The policy makers are the European central bank and the American central bank. The targets of monetary cooperation are zero inflation in Europe, zero inflation in America, and zero unemployment in America. The instruments of monetary cooperation are European money supply and American money supply. There are three targets but only two instruments, so what is needed is a loss function:
L is the loss caused by inflation in Europe, inflation in America, and unemployment in America. We assume equal weights in the loss function. The specific target of monetary cooperation is to minimize the loss, given the inflation functions and the unemployment function.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2010 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Carlberg, M. (2010). Monetary Cooperation between Europe and America: Case C. In: Monetary and Fiscal Strategies in the World Economy. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-10476-3_14
Download citation
DOI: https://doi.org/10.1007/978-3-642-10476-3_14
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-10475-6
Online ISBN: 978-3-642-10476-3
eBook Packages: Business and EconomicsEconomics and Finance (R0)