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Optimal Currency Areas

  • Alberto Alesina
  • Robert J. Barro
  • Silvana Tenreyro

As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9072.

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Date of creation: Jul 2002
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Publication status: published as Optimal Currency Areas , Alberto Alesina, Robert J. Barro, Silvana Tenreyro. in NBER Macroeconomics Annual 2002, Volume 17 , Gertler and Rogoff. 2003
Handle: RePEc:nbr:nberwo:9072
Note: EFG IFM ME
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