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Voting on the Adoption of a Common Currency

Author

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  • Casella, Alessandra

Abstract

Two countries adopting a common currency share the same monetary policy and save on transaction costs. This paper studies the impact of these two factors on the composition of markets. The establishment of a monetary union alters the boundaries between domestic and international markets and triggers distributional effects, creating disagreement among citizens over the desirability of the union. The outcome of a referendum on the choice between national currencies and monetary union depends on the country's level of development, suggesting that a common currency will be favoured by a majority of traders in both countries only at a particular stage.

Suggested Citation

  • Casella, Alessandra, 1991. "Voting on the Adoption of a Common Currency," CEPR Discussion Papers 595, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:595
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    More about this item

    Keywords

    Common Currency; Transaction Costs; Voting;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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