Commitment and the Adoption of a Common Currency
AbstractIn contrast to Mundell's inquiry on the optimality of currency areas, this article aims to understand under what circumstances a Pareto-dominant monetary union will be established. Using a multicountry overlapping generations model, we highlight gains from monetary union arising from reduced transactions costs and lower inflation. Despite these gains, countries acting independently will impose barriers to exchange through local currency restrictions, thereby creating transactions costs and providing an incentive for inflation. Therefore, the gains from monetary union are most likely to be lost without collective effort. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 44 (2003)
Issue (Month): 1 (February)
Contact details of provider:
Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
- Russell Cooper & Hubert Kempf, 2000.
"Designing Stabilization Policy in a Monetary Union,"
Boston University - Institute for Economic Development
99, Boston University, Institute for Economic Development.
- Russell W. Cooper & Hubert Kempf, 2000. "Designing Stabilization Policy in a Monetary Union," NBER Working Papers 7607, National Bureau of Economic Research, Inc.
- Russell Cooper & Hubert Kempf, 2000. "Designing Stabilization Policy in a Monetary Union," Econometric Society World Congress 2000 Contributed Papers 0529, Econometric Society.
- Russell Cooper & Hubert Kempf, 2000. "Designing stabilization policy in a monetary union," Working Paper 0001, Federal Reserve Bank of Cleveland.
- Russell W. Cooper & Hubert Kempf., 2001. "Dollarization and the conquest of hyperinflation in divided societies," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 3-12.
- Chang, Roberto, 1991.
"Bargaining a Monetary Union,"
91-02, C.V. Starr Center for Applied Economics, New York University.
- Anne Sibert, 1990.
"Government finance in a common currency area,"
Research Working Paper
90-09, Federal Reserve Bank of Kansas City.
- Canzoneri, Matthew B., 1989. "Adverse incentives in the taxation of foreigners," Journal of International Economics, Elsevier, vol. 27(3-4), pages 283-297, November.
- Fischer, Stanley, 1982. "Seigniorage and the Case for a National Money," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 295-313, April.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Timur Hulagu & Devrim Ikizler, 2010. "Effects of Monetary Unions on Inequalities (Para Birliklerinin Esitsizlikler Uzerindeki Etkileri)," Working Papers 1014, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- David M. Arseneau, 2004. "Optimal inflation in an open economy with imperfect competition," Finance and Economics Discussion Series 2004-25, Board of Governors of the Federal Reserve System (U.S.).
- Richard W. Evans, 2012.
"Is Openness Inflationary? Policy Commitment and Imperfect Competition,"
BYU Macroeconomics and Computational Laboratory Working Paper Series
2012-06, Brigham Young University, Department of Economics, BYU Macroeconomics and Computational Laboratory.
- Evans, Richard W., 2012. "Is openness inflationary? Policy commitment and imperfect competition," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1095-1110.
- Cristina Arellano & Jonathan Heathcote, 2007.
"Dollarization and financial integration,"
International Finance Discussion Papers
890, Board of Governors of the Federal Reserve System (U.S.).
- Jonathan Heathcote & Cristina Arellano, 2004. "Dollarization and Financial Integration," 2004 Meeting Papers 10, Society for Economic Dynamics.
- Arellano, Cristina & Heathcote, Jonathan, 2007. "Dollarization and Financial Integration," CEPR Discussion Papers 6116, C.E.P.R. Discussion Papers.
- Cristina Arellano & Jonathan Heathcote, 2007. "Dollarization and financial integration," Staff Report 385, Federal Reserve Bank of Minneapolis.
- David Arseneau, 2012.
"Expectation traps in a new Keynesian open economy model,"
Springer, vol. 49(1), pages 81-112, January.
- David M. Arseneau, 2004. "Expectation traps in a New Keynesian open economy model," Finance and Economics Discussion Series 2004-45, Board of Governors of the Federal Reserve System (U.S.).
- Azzimonti, Marina & de Francisco, Eva & Quadrini, Vincenzo, 2012.
"Financial Globalization, Inequality, and the Raising of Public Debt,"
CEPR Discussion Papers
8893, C.E.P.R. Discussion Papers.
- Marina Azzimonti & Eva de Francisco & Vincenzo Quadrini, 2012. "Financial globalization, inequality, and the raising of public debt," Working Papers 12-6, Federal Reserve Bank of Philadelphia.
- David Arseneau, 2007. "The Inflation Tax in an Open Economy with Imperfect Competition," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(1), pages 126-147, January.
- Richard W. Evans, 2007. "Is openness inflationary? Imperfect competition and monetary market power," Globalization and Monetary Policy Institute Working Paper 01, Federal Reserve Bank of Dallas.
- Hubert KEMPF, 2006. "The Constitutional Treaty of the EU and the institutional framework," Departmental Working Papers 2006-05, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- David M. Arseneau, 2004. "Optimal Inflation in an Open Economy," Econometric Society 2004 North American Summer Meetings 279, Econometric Society.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or ().
If references are entirely missing, you can add them using this form.