The goal of this paper is to study the ability of different monetary regimes to satisfy the Maastricht criteria. We perform our analysis in the framework of a two-sector small open economy DSGE model with nominal rigidities exposed to both domestic and external shocks. We analyze the regimes...

The Maastricht convergence criteria set constraints on both monetary and fiscal policies in the EMU Accession Countries. This paper uses a DSGE model of a two sector small open economy with distortionary taxes to address the following question: How do the Maastricht convergence criteria modify...

The EMU accession countries are obliged to fulfill the Maastricht convergence criteria prior to entering the EMU. What should be the optimal monetary policy satisfying these criteria? To answer this question, the paper proposes a DSGE model of a two-sector small open economy. First, I derive the...

This paper explores the fiscal devaluation hypothesis in a model of a monetary union characterised by national fiscal and supranational monetary policy. We show that a unilateral tax shift towards indirect taxes in one of the countries produces small but non-negligible long-run effects on output...

This paper studies the choice of the monetary regime in a small open economy with special focus on the EMU accession countries. In the framework of a two - country DSGE model we conduct policy experiments consisting in analysing the effects of different monetary regimes (roughly representing the...

Countries' concerns with the value of their currency have been extensively studied and documented in the literature. Capital controls can be (and often are) used as a tool to manage exchange rate fluctuations. This paper investigates whether countries can benefi t from using such a tool. We...

The EMU accession countries are obliged to fulfill the Maastricht convergence criteria prior to entering the EMU. What should be the optimal monetary policy satisfying these criteria? To answer this question, the paper proposes a DSGE model of a two-sector small open economy. First, I derive the...

In this paper, we consider how monetary policy in a large, foreign economy affects optimal monetary policy in a small open economy (‘home') in response to a large global demand shock that pushes both economies to the zero lower bound (ZLB) on nominal interest rates. We show that the inability...

In this paper, we consider how monetary policy in a large, foreign economy affects optimal monetary policy in a small open economy ('home') in response to a large global demand shock that pushes both economies to the zero lower bound (ZLB) on nominal interest rates. We show that the inability of...