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On the Welfare Benefits of An International Currency

  • Prakash Kannan

Is it beneficial for a country's currency to be used internationally? And, if so, can we quantify the benefit? Since the emergence of the euro, there has been great interest in the consequences of a transfer of the US dollar's premier international role to the euro. Building on recent advancements in the literature on search models of money, this paper presents a novel model-based approach towards assessing the welfare benefits associated with the international use of a country's currency. The welfare gain for the Euro area in having the euro internationally used ranges from 1.7% to 2.1% of consumption.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/49.

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Length: 37
Date of creation: 01 Mar 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/49
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