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IMF Staff papers: Volume 41 No. 4
Author:
International Monetary Fund. Research Dept.
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Series:
IMF Staff Papers
Volume/Issue:
Volume 1994: Issue 004
Language:
English
Publication Date:
01 Jan 1994
DOI:
https://doi.org/10.5089/9781451930887.024
ISBN:
9781451930887
ISSN:
1020-7635
Pages:
176
Keywords:
SP; currency union; lending rate; terms of trade; currency arrangement; arrangements in country; progress of economic reform; export tax breaks; exchange rate strategy; Monetary unions; Tariffs; Money markets; Consumption; Pensions; Sub-Saharan Africa; Central and Eastern Europe; Europe; Global; Eastern Europe
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The paper presents a model of optimum currency areas using a general equilibrium approach with regionally differentiated goods. The choice of a currency union depends upon the size of the underlying disturbances, the correlation between these disturbances, the costs of transactions across currencies, factor mobility across regions, and the interrelationships between demand for different goods. It is found that, while a currency union can raise the welfare of the regions within the union, it unambiguously lowers welfare for those outside the union. [JEL F33, F36]
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Cover IMF Staff Papers
IMF Staff Papers
ISSN:
1020-7635
Publisher:
International Monetary Fund