Currency Unions

Citation:

Alesina, Alberto. 2000. “Currency Unions”. Copy at http://www.tinyurl.com/yykt3gt7

Abstract:

What is the optimal number of currencies in the world? Common currencies aspect trading costs and, thereby, the amounts of trade, output, and consumption. From the perspective of monetary policy, the adoption of another country?s currency trades offers the benefits of commitment to price stability against the loss of an independent stabilization policy. The nature of the trade depends on coñmovements of disturbances, on distance, trading costs, and on institutional arrangements such as the willingness of anchor countries to accommodate to the interests of clients.