Monetary Union and the Transaction Cost Savings of a Single Currency
AbstractThis paper computes the transaction cost savings derived from the European Monetary Union. A continuous-time, stochastic, Baumol-like model is generalized to include several currencies and calibrated to fit European data. The analysis implies an upper bound for the savings derived from reductions in transaction costs of approximately 0.69% of Union GDP. Additionally, the magnitudes of the brokerage fee and the volatility of transactions, whose estimation has traditionally been difficult to address empirically, are approximated for Europe. Copyright 2002 by Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 10 (2002)
Issue (Month): 2 (May)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
Other versions of this item:
- Hugo Rodríguez, 1998. "Monetary unions and the transaction cost savings of a single currency," Economics Working Papers 291, Department of Economics and Business, Universitat Pompeu Fabra.
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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