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Currency Unions and International Integration

Listed author(s):
  • Rose, Andrew K
  • Engel, Charles

This paper characterizes the integration patterns of international currency unions (such as the CFA Franc Zone). We empirically explore different features of currency unions, and compare them to countries with sovereign monies by examining the criteria for Mundell's concept of an optimum currency area. We find that members of currency unions are more integrated than countries with their own currencies. For instance, we find that currency union members have more trade and less volatile real exchange rates than countries with their own monies; business cycles are more highly synchronized across currency union countries than across countries with sovereign monies.

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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 34 (2002)
Issue (Month): 4 (November)
Pages: 1067-1089

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Handle: RePEc:mcb:jmoncb:v:34:y:2002:i:4:p:1067-89
Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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  1. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters,in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412 National Bureau of Economic Research, Inc.
  2. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
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  12. Engel, Charles & Hendrickson, Michael K. & Rogers, John H., 1997. "Intranational, Intracontinental, and Intraplanetary PPP," Journal of the Japanese and International Economies, Elsevier, vol. 11(4), pages 480-501, December.
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  17. Rogers, John H. & Jenkins, Michael, 1995. "Haircuts or hysteresis? Sources of movements in real exchange rates," Journal of International Economics, Elsevier, vol. 38(3-4), pages 339-360, May.
  18. French, Kenneth R & Poterba, James M, 1991. "Investor Diversification and International Equity Markets," American Economic Review, American Economic Association, vol. 81(2), pages 222-226, May.
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  21. Paul F. Whiteley (ed.), 1998. "Economic Policy," Books, Edward Elgar Publishing, volume 0, number 996.
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