A Model of an Optimum Currency Area
Copyright policy )A Model of an Optimum Currency Area
AbstractThis paper develops a model of the circumstances under which it is beneficial to participate in a currency area. The proposed two-country monetary model of trade with nominal rigidities encompasses the real and monetary arguments suggested by the optimum currency area literature: correlation of real and monetary shocks, international factor mobility, fiscal adjustment, openness, difference in national inflationary biases, and transactions costs. The effect of openness on the net benefits is ambiguous, contrary to the usual argument that more open economies are better candidates for a currency area. Also, prospective member countries do not necessarily agree on whether a given currency union should be created.
- International Monetary Fund United States
Internationale Arbeitsteilung, Optimaler Währungsraum, cost- benefit analysis, Wechselkurssystem, Social Sciences, Währungsunion, Zwei-Länder-Modell, H, Optimum currency areas,cost-benefit analysis,exchange rate regimes,currency union,monetary integration, Monetary unions;Optimum currency areas, cost-benefit analysis, exchange rate regimes, currency union, monetary integration, inflation, exchange rate, monetary shocks, exchange rates, currency areas, Optimum currency areas,cost- benefit analysis,exchange rate regimes,currency union,monetary integration, F33, H77, E52, HB71-74, Offene Volkswirtschaft, F31, ddc:330, F36, cost-benefit analysis, monetary integration, F4, Economics as a science, Außenwirtschaftstheorie, E61, Kosten-Nutzen-Analyse, J61, exchange rate regimes, currency union, F02, Theorie, E42, Optimum currency areas, jel: jel:E61, jel: jel:J61, jel: jel:E42, jel: jel:F02, jel: jel:F31, jel: jel:E52, jel: jel:H77, jel: jel:F36, jel: jel:F33, jel: jel:F4
Internationale Arbeitsteilung, Optimaler Währungsraum, cost- benefit analysis, Wechselkurssystem, Social Sciences, Währungsunion, Zwei-Länder-Modell, H, Optimum currency areas,cost-benefit analysis,exchange rate regimes,currency union,monetary integration, Monetary unions;Optimum currency areas, cost-benefit analysis, exchange rate regimes, currency union, monetary integration, inflation, exchange rate, monetary shocks, exchange rates, currency areas, Optimum currency areas,cost- benefit analysis,exchange rate regimes,currency union,monetary integration, F33, H77, E52, HB71-74, Offene Volkswirtschaft, F31, ddc:330, F36, cost-benefit analysis, monetary integration, F4, Economics as a science, Außenwirtschaftstheorie, E61, Kosten-Nutzen-Analyse, J61, exchange rate regimes, currency union, F02, Theorie, E42, Optimum currency areas, jel: jel:E61, jel: jel:J61, jel: jel:E42, jel: jel:F02, jel: jel:F31, jel: jel:E52, jel: jel:H77, jel: jel:F36, jel: jel:F33, jel: jel:F4
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