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This paper shows that the degree of competition affects the current account response to nominal shocks. The mechanism hinges on the relationship between the mark-up and the degree of real rigidity of prices. In a model with intermediate goods, the degree of real rigidity increases in the markup. A weaker response of prices to nominal shocks strengthens the "expenditure switching" effect of the devaluation to the benefit of the current account. We first analyse the relationship between the mark-up and the real rigidity in a simple closed economy model. We then show numerically how the mark-up can affect the response of the current account to monetary shocks.

This paper studies the implication, in terms of welfare and monetary policy, of unequal degrees of competition across members of a currency area. We look at two ways in which the degree of competition in the market for goods can affect welfare in a currency area. One is through different average degrees of competition in the monetary union; the other is through different degrees of competition across its members. We find two interesting results. First, if prices are sticky, more competition tends to be detrimental to welfare. Second, welfare increases in proportion to the asymmetry of the union. These results imply that the monetary authority should react more strongly to inflationary pressure coming from the more competitive member of the monetary union. We compute the optimal monetary policy of the central bank of the union and compare its performance with a simple Taylor rule. We discuss the circumstances under which the Taylor rule approaches the optimal rule. The optimal inflation target for the asymmetric union is also discussed.

This paper studies the effect on monetary policy of a non-homogeneous degree of competition across the (two) members of a monetary union. In particular, we assess the welfare loss brought about by the use of a simple interest rate rule that does not take into account such structural differences. Our results show that, ceteris paribus, the welfare-maximizing central bank should react more aggressively to the inflation pressure generated by the more competitive economy. We extend the results of Benigno (2003) in two ways. First, we show that, if the degree of competition differs across countries, the optimal rule could involve a larger weight on the more "flexible" country. Second, we allow for a non-unitelastic demand for import. We show that this can alter Benigno's results even under asymmetric degree of competition. Our study suggests that the size of the welfare losses due to the neglect of these asymmetries crucially depends on their actual combination. Furthermore, we show that if information on the true extent of the asymmetries is incomplete, the symmetric rule could outperform the optimal rule.

The degree of competition affects the current account response to nominal shocks. The mechanism hinges on the relationship between the mark–up and the degree of real rigidity of prices. In a model with intermediate goods, the degree of real rigidity increases in the mark–up. A weaker response of prices to nominal shocks strengthens the 'expenditure switching' effect of the devaluation to the benefit of the current account. We analyse the relationship between the mark–up and the real rigidity in a simple closed economy model and show numerically how the mark–up can affect the response of the current account to monetary shocks in an open economy. JEL Classification: F32, E32 Rigidité des prix, marges bénéficiaires et la dynamique du compte courant. Ce mémoire montre que le degré de concurrence affecte la réaction du compte courant aux chocs nominaux. Le mécanisme dépend de la relation entre la marge beńéficiaire et le degré de rigidité réelle des prix. Dans un modèle qui prend en compte les biens intermédiaires, le degré de rigidité réelle des prix s'accroît avec la marge bénéficiaire. Une réponse plus faible des prix aux chocs nominaux renforce l'effet de « déplacement de la dépense » de la dévaluation au bénéfice du compte courant. On analyse d'abord la relation entre la marge bénéficiaire et la rigidité réelle des prix dans un modèle simple d'économie fermée. On montre ensuite en chiffres comment la marge bénéficiaire peut affecter la réaction du compte courant aux chocs monétaires.

This paper studies the implication, in terms of welfare and monetary policy, of unequal degrees of competition across members of a currency area. We look at two ways in which the degree of competition in the market for goods can affect welfare in a currency area. One is through different average degrees of competition in the monetary union; the other is through different degrees of competition across its members. We find two interesting results. First, if prices are sticky, more competition tends to be detrimental to welfare. Second, welfare increases in proportion to the asymmetry of the union. These results imply that the monetary authority should react more strongly to inflationary pressure coming from the more competitive member of the monetary union. We compute the optimal monetary policy of the central bank of the union and compare its performance with a simple Taylor rule. We discuss the circumstances under which the Taylor rule approaches the optimal rule. The optimal inflation target for the asymmetric union is also discussed. ; Dieses Papier untersucht die Auswirkung unterschiedlicher Wettbewerbsintensitäten in den Ländern eines Währungsraums auf die Wohlfahrt und die optimale Geldpolitik. Betrachtet werden zwei Möglichkeiten, wie die Wettbewerbsintensität am Gütermarkt die Wohlfahrt eines Währungsraums beeinflussen kann. Zwei interessante Schlussfolgerungen können gezogen werden. Erstens wirkt sich bei unflexiblen Preisen ein erhöhter Wettbewerb in der Regel negativ auf die Wohlfahrt aus. Zweitens kann die Geldpolitik effektiver sein, wenn die Länder größere Asymmetrien aufweisen. Diese Ergebnisse legen es nahe, dass die Zentralbank stärker auf einen Inflationsdruck reagieren sollte, der von dem Mitgliedsland ausgeht, in dem der Wettbewerb intensiver ist. Die optimale Geldpolitik der Zentralbank der Währungsunion wird ermittelt und mit einer einfachen Taylor-Regel verglichen. Es werden die Voraussetzungen erörtert, unter denen die Taylor-Regel sich der optimalen Regel annähert. Diskutiert wird auch das optimale Inflationsziel einer asymmetrischen Währungsunion.