IDEAS home Printed from https://ideas.repec.org/p/hal/spmain/hal-03416221.html
   My bibliography  Save this paper

On the Inflationary Bias of Common Currencies: the Latin Union Puzzle

Author

Listed:
  • Marc Flandreau

    (Sciences Po - Sciences Po, Centre for Finance and Development - GRADUATE INSTITUTE OF INTERNATIONAL AND DEVELOPMENT STUDIES)

Abstract

The prospect of imminent monetary unification in Europe has directedattention to the importance of the institutional setting that would beappropriate for efficient management of a common currency. The supportersof a ‘EuroFed' often use a popular argument that stresses the superiority of acentral bank as compared to a regime where sovereign countries can print acommon currency [see e.g. Emerson (1992, p. 35)]. It is said that in the lattercase, there is an incentive for each country to ‘free-ride' by ‘over-issuing' thecommon currency. since while the cost of inflation is shared, the benefit ofseigniorage accrues to the country that prints the money. The problem wasfirst formalized by Casella and Feinstein (1989) in a two-country model.They concluded that - due to ‘pervasive free-rider problems' - the success ofa common currency depends crucially on the organization of a jointlycontrolled central bank (...).

Suggested Citation

  • Marc Flandreau, 1993. "On the Inflationary Bias of Common Currencies: the Latin Union Puzzle," SciencePo Working papers Main hal-03416221, HAL.
    • Handle: RePEc:hal:spmain:hal-03416221
    DOI: 10.1016/0014-2921(93)90038-C
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03416221
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:spmain:hal-03416221. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Contact - Sciences Po Departement of Economics (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.