The choice of monetary regime has played an important role in economic discussion notably in connection with the discussion on a European Monetary Union. It is the aim of this book to present a new view with regard to this issue. It is argued that monetary factors play a role in the determination of long-term production also in a model context characterised by rational expectations and wage and price flexibility.

Work on the present version of the book was started in 1995. The author is very grateful to colleagues at the Copenhagen Business School and at the University of Copenhagen who have provided critical comments and suggestions to improve both the current and earlier editions of this book. I wish to thank especially Niels Henrik Børjesson for valuable comments and technical assistance. A thank also goes to Svend Ostrup who has provided technical assistance. Finally, I want to thank the Copenhagen Research Project on European Integration (CORE) and the Copenhagen Business School who have provided financial support.