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The sustainability of monetary unions. Can the Euro survive?

Author

Listed:
  • Paolo Canofari
  • Giancarlo Marini
  • Giovanni Piersanti

Abstract

This paper aims to propose a new measure of exchange market pressure for countries operating in hard peg regimes, such as currency unions, currency boards or full dollarization. We use a general model of currency crisis to derive a sustainability index based upon the relationship between the shadow exchange rate and the output gap required to maintain the currency peg. We apply the new index to European Union countries in order to assess the sustainability of the Euro.
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Suggested Citation

  • Paolo Canofari & Giancarlo Marini & Giovanni Piersanti, 2012. "The sustainability of monetary unions. Can the Euro survive?," CIMEO Working Paper Series 94, Centre for Investigation and Modelling of Experimental Observations (CIMEO).
    • Handle: RePEc:ter:wpaper:0094
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    Cited by:

    1. Paolo Canofari & Giancarlo Marini & Giovanni Piersanti, 2015. "Expectations and systemic risk in EMU government bond spreads," Quantitative Finance, Taylor & Francis Journals, vol. 15(4), pages 711-724, April.
    2. Paolo Canofari & Giovanni Di Bartolomeo & Giovanni Piersanti, 2013. "Theory and practice of contagion in monetary unions. Domino effects in EU Mediterranean countries: The case of Greece, Italy and Spain," CIMEO Working Paper Series 98, Centre for Investigation and Modelling of Experimental Observations (CIMEO).
    3. Mariam A. Voskanyan, 2018. "Assessment of Prospects for Currency Integration Between Armenia and Russia," Journal of New Economy, Ural State University of Economics, vol. 19(5), pages 16-31, October.
    4. Paolo Canofari & Giovanni Bartolomeo & Giovanni Piersanti, 2014. "Theory and Practice of Contagion in Monetary Unions: Domino Effects in EMU Mediterranean Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(3), pages 259-267, August.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G01 - Financial Economics - - General - - - Financial Crises

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