Optimal Inflation, Monetary Integration, and Asymmetric Sticky Prices
Cardiff University; Institute of Economics, Polish Academy of Sciences
Two-country general equilibrium model with cash-in-advance constraints for money demand, Calvo staggered price setting, monopolistic competition, and analysis of monetary union versus local currencies regimes with asymmetric price stickiness ac
Calvo staggered price setting, linear production function with labor as sole input, firms sell domestically and abroad
Figure 4
Monetary union, flexible prices (λ=0), imperfect competition