Credibility and Seigniorage in a Common Currency Area
In the paper we show that common currency areas tend to amplify the inefficiencies associated with lack of credibility of monetary policy. Lack of commitment in redistribution of seigniorage leads to excessive inflation and suboptimal taxation in the Monetary Union. Lack of commitment to inflation creates multiple inefficient equilibria that do not exist in a regime of national monetary independence.
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Volume (Year): 34 (2002)
Issue (Month): 4 (November)
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- Sinn, Hans-Werner & Feist, Holger, 1997.
"Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU,"
Munich Reprints in Economics
19567, University of Munich, Department of Economics.
- Hans-Werner Sinn & Holger Feist, 1997. "Eurowinners and Eurolosers: The Distribution of Seigniorage Wealth in EMU," NBER Working Papers 6072, National Bureau of Economic Research, Inc.
- Feist, Holger & Sinn, Hans-Werner, 1997. "Eurowinners and Eurolosers: The Distribution of Seigniorage Wealth in EMU," CEPR Discussion Papers 1747, C.E.P.R. Discussion Papers.
- Sibert, Anne, 1992.
"Government finance in a common currency area,"
Journal of International Money and Finance,
Elsevier, vol. 11(6), pages 567-578, December.
- Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
- Feenstra, Robert C., 1986. "Functional equivalence between liquidity costs and the utility of money," Journal of Monetary Economics, Elsevier, vol. 17(2), pages 271-291, March.
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