This book studies the causes and cures of inflation in a monetary union.
It carefully discusses the effects of money growth and output growth on
inflation. The focus is on producer inflation, currency depreciation and
consumer inflation. For instance, what determines the rate of consumer
inflation in Europe, and what in America? Moreover, what determines the
rate of consumer inflation in Germany, and what in France? Further
topics are real depreciation, nominal and real interest rates, the
growth of nominal wages, the growth of producer real wages, and the
growth of consumer real wages. Here productivity growth and labour
growth play significant roles. Another important issue is target
inflation and required money growth. A special feature of this book is
the numerical estimation of shock and policy multipliers. The present
book is part of a larger research project on monetary union, see
Carlberg (1999, 2000, 2001). Over the years, in working on this project,
I have benefited from comments by lain Begg, Christopher Bliss, Volker
Clausen, Peter Flaschel, Wilfried Fuhrmann, Michael Funke, Franz X. Hof,
Jay H. Levin, Alfred MauBner, Hans G. Monissen, Manfred J. M. Neumann,
Klaus Neusser, Franco Reither, Michael Schmid, Jiirgen von Hagen, and
Helmut Wagner. In addition, Michael Brauninger and Alkis Otto carefully
discussed with me all parts of the manuscript. Last but not least, Doris
Ehrich did the secretarial work as excellently as ever. I would like to
thank all of them.
