01857cas a2200253 a 4500 AALejournalIMF000311 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451844009 1018-5941 BD-DhAAL BD-DhAAL Laxton, Douglas. Possible Effects of European Monetary Union on Switzerland : A Case Study of Policy Dilemmas Caused by Low Inflation and the Nominal Interest Rate Floor / Douglas Laxton, Eswar Prasad. Washington, D.C. : International Monetary Fund, 1997. 1 online resource (33 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper examines the possible effects on Switzerland of asset preference shifts in favor of Swiss-franc-denominated assets that could result from EMU. Alternative policy responses to temporary and persistent asset preference shifts and the consequent pressures for exchange rate appreciation are examined. Simulations of a stylized macroeconomic model of the Swiss economy indicate that monetary policy is likely to be the most effective tool for stabilizing output in the short run, but at the cost of a temporary increase in inflationary pressures. The simulations highlight the dilemmas faced by policymakers in an environment with low inflation and nominal interest rates. Mode of access: Internet Prasad, Eswar. IMF Working Papers; Working Paper ; No. 1997/023 Full text available on IMF http://elibrary.imf.org/view/journals/001/1997/023/001.1997.issue-023-en.xml IMF e-Library