IDEAS home Printed from https://ideas.repec.org/p/udt/wpbsdt/dieciocho.html
   My bibliography  Save this paper

Macroeconomic Coordination and Monetary Unions in a N-country World: Do all Roads Lead to Rome?

Author

Listed:
  • Federico Sturzenegger
  • Andrew Powell

Abstract

In Europe, twelve countries have joined a currency union but four have stayed out. The EU enlargement process implies a large set of potential EMU entrants. In Latin America, two countries have recently dollarized and regional currencies have also been a recurring theme. We develop a theoretical model in which countries are exposed to real and monetary shocks of both a systemic and individual nature. The model suggests when countries should float, form a CU or fix to an anchor as a function of their sensitivity to systemic shocks and the size of individual shocks. In an empirical analysis we consider a set of countries in Latin America. We find that what is beneficial for a given country depends on the actions of others. Integration may then be path dependent, and all roads may not lead to Rome.

Suggested Citation

  • Federico Sturzenegger & Andrew Powell, 2002. "Macroeconomic Coordination and Monetary Unions in a N-country World: Do all Roads Lead to Rome?," Business School Working Papers dieciocho, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpbsdt:dieciocho
    as

    Download full text from publisher

    File URL: http://www.utdt.edu/departamentos/empresarial/cif/pdfs-wp/wpcif-142002.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Charles R. Bean, 1992. "Economic and Monetary Union in Europe," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 31-52, Fall.
    2. William Poole, 1969. "Optimal choice of monetary policy instruments in a simple stochastic macro model," Special Studies Papers 2, Board of Governors of the Federal Reserve System (U.S.).
    3. Tamim Bayoumi, 1994. "A Formal Model of Optimum Currency Areas," IMF Staff Papers, Palgrave Macmillan, vol. 41(4), pages 537-554, December.
    4. William Poole, 1970. "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, Oxford University Press, vol. 84(2), pages 197-216.
    5. Bayoumi, Tamim & Eichengreen, Barry, 1994. "Monetary and exchange rate arrangements for NAFTA," Journal of Development Economics, Elsevier, vol. 43(1), pages 125-165, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:udt:wpbsdt:dieciocho. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicolás Del Ponte). General contact details of provider: http://edirc.repec.org/data/eeutdar.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.