Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries
AbstractIn this paper we develop a procedure for applying the core implications of the theory of optimum currency areas to cross-country data. We demonstrate that these implications find strong empirical support. The relationship between the characteristics of countries to which OCA theory points and the observed behavior of exchange rates seems sufficiently stable and robust to support simple forecasting. Extrapolating the independent variables, we therefore use our exchange rate equations to predict which countries will be best able to support stable exchange rates in the future -- equivalently, which are likely to be best prepared to be among the founding members of Europe's monetary union.
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Bibliographic InfoPaper provided by University of California at Berkeley in its series Center for International and Development Economics Research (CIDER) Working Papers with number C96-078.
Date of creation: 01 Dec 1996
Date of revision:
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Postal: University of California at Berkeley, Berkeley, CA USA
Web page: http://www.haas.berkeley.edu/groups/iber/wps/ciderwp.htm
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Other versions of this item:
- Eichengreen, Barry & Bayoumi, Tamim, 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Department of Economics, Working Paper Series qt5th597st, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Eichengreen, Barry & Bayoumi, Tamim, 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Center for International and Development Economics Research, Working Paper Series qt5dt9501s, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
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.:
- Tamim Bayoumi, 1994.
"A Formal Model of Optimum Currency Areas,"
IMF Staff Papers,
Palgrave Macmillan, vol. 41(4), pages 537-554, December.
- Paul Grauwe, 1996. "The economics of convergence: Towards monetary union in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(1), pages 1-27, March.
- Smaghi, L.B. & Area, C., 1993. "Rating the EC as an Optimal Currency Area," Papers 187, Banca Italia - Servizio di Studi.
- Frankel, Jeffrey A & Rose, Andrew K, 1998.
"The Endogeneity of the Optimum Currency Area Criteria,"
Royal Economic Society, vol. 108(449), pages 1009-25, July.
- Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- La stabilisation macroÃ©conomique en Zone Euro (I)
by email@example.com (Simon Ganem) in BS Initiative on 2014-02-11 04:08:54
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