How Many Monies? A Genetic Approach to Finding Optimum Currency Areas
Recent moves towards greater monetary integration in Western Europe - and disintegration in Eastern Europe and the former Soviet Union - have rekindled interest in the theoretical and empirical aspects of optimal currency areas (OCA). In this paper, we examine the marginal benefit of increasing the number of currency unions within a given geographical area. We look at six regions; the United States, Europe, the G7, the CFA zone, the FSU and the world at large. Our results suggest that (i) contiguous monetary unions are typically dominated by non-contiguous unions; (ii) neither Europe nor the United States form an optimum currency area, for both regions the costs of adopting a single currency exceeds estimates of the transaction cost savings; (iii) Germany and the United States will almost never find it to their (economic) advantage to join monetary unions.
|Date of creation:||Jul 1994|
|Publication status:||Published as "On the Mark(s): Optimum Currency Areas in Germany", EM, Vol. 13, no. 4 (October 1996): 561-573.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert P Flood & Joshua Aizenman, 1992. "A Theory of Optimum Currency Areas; Revisited," IMF Working Papers 92/39, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4805. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.