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Currency blocs in the 21st century

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  • Christoph Fischer

Abstract

Based on a classification of countries and territories according to their regime and anchor currency choice, the study considers the two major currency blocs of the present world. A nested logit regression suggests that long-term structural economic variables determine a given country's currency bloc affiliation. The dollar bloc differs from the euro bloc in that there exists a group of countries that peg temporarily to the U.S. dollar without having close economic affinities with the bloc. The estimated parameters are consistent with an additive random utility model interpretation. A currency bloc equilibrium in the spirit of Alesina and Barro (2002) is derived empirically.

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Paper provided by Federal Reserve Bank of Dallas in its series Globalization and Monetary Policy Institute Working Paper with number 87.

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Date of creation: 2011
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Handle: RePEc:fip:feddgw:87

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Keywords: Foreign exchange ; International finance;

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Cited by:
  1. Fischer, Christoph, 2011. "Currency blocs in the 21st century," Discussion Paper Series 1: Economic Studies 2011,12, Deutsche Bundesbank, Research Centre.

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