This paper examines the macroeconomic consequences of rigidities in the European labour markets, and shows that attempts to impose a single monetary regime on economies with different structures can lead to a breakdown in co-ordination. Such breakdowns can occur when expenditure-switching...

In this paper we survey and appraise the main contributions to solving and stabilising non-linear equation systems typically found in Economics. We are keen wherever possible to draw distinctions and limiting cases between different solution methods, define acceleration strategies and encourage...

This paper contains a new convergence theorem for Gauss-Seidel (SOR) iterations for an arbitrary equation system. We use that theorem to show how to reorder equations and to extend their radius of convergence. It is not generally optimal to minimise the number or size of the above diagonal...

This paper makes a quantitative assessment of the impact of sterling s exit from the exchange rate mechanism (ERM) in September 1992, taking as given other events and other countries' policies as they happened. To do this we use two different econometric models, each with its own information...

This paper examines and compares the costs of noncooperative (i.e., national) fiscal policies in a monetary union, with the costs of assigning monetary policy to price stability and fiscal policy to output growth as recommended in the Maastricht Treaty. Compared to a fully coordinated monetary...

How is the attempt of the European Community (EC) to create a single market going to affect the developing countries? This article argues that the net direct effects of EC-92 may be rather small: the trade creation and trade diversion effects brought about by the program may cancel each other...

Whether exchange rate targeting helps economic performance depends on whether shocks and spillovers are mutually reinforcing or offsetting; hence, on whether the cost of supporting the extra exchange rate target is greater than the degree of coordination it induces. Asymmetries in policy power,...

Economic and monetary reunification in Germany has proved to be more expensive than previously thought--and not jus t for the Germans. If a "Mezzogiorno problem" of continuing fiscal transfers to the East, and possible migration flows westwards, are t o be avoided, then there has to be...

Latent in the notion of rational expectations is the idea of optimizing behavior in the private sector. This paper develops a way for evaluating price stabilization programs when the behavior of agents--and of speculators in particular-- is influenced by forward looking expectations of market...

Much has been written about the benefits of monetary union in Europe, but little about the possible costs. This paper use s a small simulation model to analyze the costs and best design for EMU. The authors find demand/supply asymmetries cause inflation, output losses and extra adjustment costs....