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Speculative Attacks on a Monetary Union?

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  • Dooley, Michael

Abstract

This paper develops the idea that full monetary union eliminates the channels through which private speculative attacks have typically ended fixed exchange rate regimes. Profitable speculation against the regime would require government actions following a regime change that are prohibitively costly to the government. The inherent stability of a full monetary union is not a feature of transitional arrangements as currently envisioned for the EMU. A relatively simple but unconventional policy initiative of "euroization" can considerably reduce the vulnerability of transitional arrangements to speculative attack. Copyright @ 1998 by John Wiley & Sons, Ltd. All rights reserved.

Suggested Citation

  • Dooley, Michael, 1998. "Speculative Attacks on a Monetary Union?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(1), pages 21-26, January.
  • Handle: RePEc:ijf:ijfiec:v:3:y:1998:i:1:p:21-26
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    Cited by:

    1. Andreas Steiner & Sven Steinkamp & Frank Westermann, 2017. "Exit Strategies, Capital Flight and Speculative Attacks: Europe's Version of the Trilemma," CESifo Working Paper Series 6753, CESifo Group Munich.
    2. Andrew Coleman, 2001. "Three Perspectives on an Australasian Monetary Union," RBA Annual Conference Volume,in: David Gruen & John Simon (ed.), Future Directions for Monetary Policies in East Asia Reserve Bank of Australia.
    3. Willem H. Buiter, 1999. "Alice in Euroland," Journal of Common Market Studies, Wiley Blackwell, vol. 37(2), pages 181-209, June.
    4. John Cotter, 2005. "Tail behaviour of the euro," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 827-840.
    5. Brahima Coulibaly, 2009. "Currency unions and currency crises: an empirical assessment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 14(3), pages 199-221.
    6. Andreas M. Fischer & Thomas J. Jordan & Caesar P. Lack, 2002. "Giving Up the Swiss Franc:Some Considerations on Seigniorage Flows under EMU," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(I), pages 61-82, March.

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