Market Deregulation and Optimal Monetary Policy in a Monetary Union

For helpful comments, we thank Francesco Giavazzi, Alexandre Jeanneret, Athanasios Orphanides, Paolo Pesenti, and participants in seminars and conferences at Boğaziçi University-CEE 2012 Annual Conference, Federal Reserve Bank of Boston, Florida State University, Magyar Nemzeti Bank, NBER IFM November 2012, North Carolina State University, Rutgers University, SED 2012, Société Canadienne de Science Économique, University of California-Riverside, University of Oxford, UQAM, University of Surrey, University of Virginia, and University of Washington. We are grateful to Jonathan Hoddenbagh and Tristan Potter for outstanding research assistance. Remaining errors are our responsibility. Ghironi thanks the NSF for financial support through a grant to the NBER. Work on this paper was done while Ghironi was a Visiting Scholar at the Federal Reserve Bank of Boston. The support of this institution is also acknowledged with gratitude. The views expressed in this paper are those of the authors and do not necessarily reflect those of the NBER, the Federal Reserve Bank of Boston, or Federal Reserve policy.