A Model of an Optimum Currency Area

Arbeitspapier

This 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.

Objekt anzeigen

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Economics Discussion Papers ; No. 2007-45

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Monetary Policy ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Intergovernmental Relations; Federalism; Secession ; Financial Aspects of Economic Integration ; International Monetary Arrangements and Institutions ; Foreign Exchange ; Geographic Labor Mobility; Immigrant Workers ; International Economic Order and Integration ; Policy Objectives; Policy Designs and Consistency; Policy Coordination
• Thema: Optimum currency areas ; cost-benefit analysis ; exchange rate regimes ; currency union ; monetary integration

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ricci, Luca Antonio
• Ereignis: Veröffentlichung
• (wer): Kiel Institute for the World Economy (IfW)
• (wo): Kiel
• (wann): 2007

Weitere Informationen

• Handle: http://hdl.handle.net/10419/17968