Rethinking optimal currency areas
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- dc.contributor.author Chari, V. V.ca
- dc.contributor.author Dovis, Alessandroca
- dc.contributor.author Kehoe, Patrick J.ca
- dc.date.accessioned 2016-05-30T14:23:38Z
- dc.date.available 2016-05-30T14:23:38Z
- dc.date.issued 2016-02
- dc.description.abstract The traditional Mundellian criterion, which implicitly assumes commitment to monetary policy, is that countries with similar shocks should form unions. Without such commitment a new criterion emerges: countries with dissimilar temptation shocks, namely those that exacerbate time inconsistency problems, should form unions. Critical to this new criterion is the idea that monetary policy is benevolent in that it takes into account the interests of all the countries in the union. When countries have dissimilar temptation shocks, benevolent unions can help overcome the time inconsistency problems that individual countries face. Existing unions can strictly gain by admitting new members with more severe time inconsistency problems, because policy in the expanded union is less sensitive to the temptation shocks of members of the existing union.ca
- dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/26783
- dc.language.iso engca
- dc.relation.ispartof Ademu Working Paper Series; 9
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
- dc.subject.keyword Flexible exchange rates
- dc.subject.keyword Optimum currency areas
- dc.title Rethinking optimal currency areasca
- dc.type info:eu-repo/semantics/workingPaperca