Description

The introduction of the European Monetary Union has several implications on the appropriate structure of macroeconometric models. First, institutional changes are important in order to evaluate the outcome of different policies on production and employment. Monetary policy is no longer a valid tool for the national economic authorities. Further, wage bargaining becomes more important to employment. In the long run, inflation will be fixed at the aera-wide level, and so, changes in nominal wages will lead to changes in real wades at the national level as well. In the conference volume the consequences of the new environment for the German economy are discussed. Special topics investigate the formation of model consistent expectations, production and foreign trade behavior, wage and inflation, and reaction functions for the central bank.

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