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Monetary Unions and Endogeneity of the OCA Criteria

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  • Hiroya Akiba
  • Yukihiro Iida

Abstract

This article examines an endogeneity issue within the Optimum Currency Area (OCA) theory. According to the cost-benefit analysis, we found that there are the upper and the lower bounds in the degree of monetary integration for a monetary union to be created. We also found that a country may secede from the monetary union, depending on its degree of integration. A country may also secede when production specialization is facilitated with monetary integration within a framework of the “OCA line”. We also consider the endogeneity of the “OCA Index”, and applied our analysis to the optimum number of world currencies.

Suggested Citation

  • Hiroya Akiba & Yukihiro Iida, 2009. "Monetary Unions and Endogeneity of the OCA Criteria," Global Economic Review, Taylor & Francis Journals, vol. 38(1), pages 101-116.
    • Handle: RePEc:taf:glecrv:v:38:y:2009:i:1:p:101-116
    DOI: 10.1080/12265080802692795
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    References listed on IDEAS

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    1. Jeffrey A. Frankel, 1999. "No Single Currency Regime is Right for All Countries or At All Times," NBER Working Papers 7338, National Bureau of Economic Research, Inc.
    2. Mongelli, Francesco Paolo, 2002. "ìNew" Views on the Optimum Currency Area Theory: What is EMU Telling US?," Royal Economic Society Annual Conference 2002 140, Royal Economic Society.
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    4. Mongelli, Francesco Paolo & De Grauwe, Paul, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 468, European Central Bank.
    5. Bayoumi, T. & Eichengreen, B., 1994. "One Money or Many? Analysing the Prospects for Monetary Unification in Various Parts of the World," Princeton Studies in International Economics 76, International Economics Section, Departement of Economics Princeton University,.
    6. Demyanyk, Yuliya & Volosovych, Vadym, 2005. "Macroeconomic Asymmetry in the European Union: The Difference Between New and Old Members," CEPR Discussion Papers 4847, C.E.P.R. Discussion Papers.
    7. Giancarlo Corsetti & Paolo Pesenti, 2002. "Self-validating optimum currency areas," Staff Reports 152, Federal Reserve Bank of New York.
    8. Robert Barro & Silvana Tenreyro, 2007. "Economic Effects Of Currency Unions," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 1-23, January.
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    Cited by:

    1. Andrea Bonilla Bolanos, 2014. "External Vulnerabilities And Economic Integration: Is The Union Of South American Nations A Promising Project?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 39(2), pages 97-131, June.
    2. Puiu, Cristina, 2010. "Endogenitatea criteriilor teoriei zonei monetare optime [The endogeneity of the optimum currency area criteria]," MPRA Paper 28470, University Library of Munich, Germany.
    3. Apergis, Emmanuel & Apergis, Iraklis & Apergis, Nicholas, 2019. "A new macro stress testing approach for financial realignment in the Eurozone," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 52-80.

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    Keywords

    Monetary Union; OCA; endogeneity;
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