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International money and common currencies in historical perspective

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  • Gerald P. Dwyer
  • James R. Lothian

Abstract

The authors review the history of international monies and the theory related to their adoption and use. There are four key characteristics of these currencies: high unitary value; relatively low inflation rates for long periods; issuance by major economic and trading powers; and spontaneous, as opposed to planned, adoption internationally. The economic theory of the demand for money provides support for the importance of these characteristics. The value of a unit is arbitrary for a fiat money, but the other characteristics are likely to be important for determining any fiat money that will be the international money in the future. If the euro continues to exist for the next half century or so and has a relatively stable value, the authors conclude that the euro is likely to be serious competition for the dollar as the international money.

Suggested Citation

  • Gerald P. Dwyer & James R. Lothian, 2002. "International money and common currencies in historical perspective," FRB Atlanta Working Paper 2002-7, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:2002-7
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    References listed on IDEAS

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    1. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
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    Cited by:

    1. Lothian, James R., 2002. "The internationalization of money and finance and the globalization of financial markets," Journal of International Money and Finance, Elsevier, vol. 21(6), pages 699-724, November.
    2. Chrysost Bangake & Aram Belhadj & Nabil Jedlane, 2007. "Towards Maghreb Monetary Unification: What does the Theory and History Tell Us?," Post-Print halshs-00366756, HAL.
    3. John Hawkins & Paul Masson, 2003. "Economic aspects of regional currency areas and the use of foreign currencies," BIS Papers chapters,in: Bank for International Settlements (ed.), Regional currency areas and the use of foreign currencies, volume 17, pages 4-42 Bank for International Settlements.
    4. Baier, Scott L. & Dwyer, Gerald Jr. & Tamura, Robert, 2004. "Does opening a stock exchange increase economic growth?," Journal of International Money and Finance, Elsevier, pages 311-331.
    5. Gerald P. Dwyer & James R. Lothian, 2003. "The economics of international monies," FRB Atlanta Working Paper 2003-37, Federal Reserve Bank of Atlanta.
    6. Juan Pi??eiro Chousa, & Artur Tamazian, & Davit N. Melikyan,, 2008. "MARKET RISK DYNAMICS AND COMPETITIVENESS AFTER THE EURO: Evidence from EMU Members," William Davidson Institute Working Papers Series wp916, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Economic history;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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