A Theory of Optimum Currency Areas: Revisited

May 1, 1992

Preview Citation

Format: Chicago

Robert P Flood, and Joshua Aizenman. A Theory of Optimum Currency Areas: Revisited, (USA: International Monetary Fund, 1992) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Starting with Friedman and Mundell the academic literature has conducted a high level debate concerning the design of cross-country monetary arrangements. That debate has become very complex and the data requirements necessary for appropriate application of the principles developed are far beyond the means of the very nations for which the principles might be valuable. In this paper we return to the simplicity of the early arguments and formalize them in a way that may be helpful for currency area decisions where little is known about economic structure.

Subject: Conventional peg, Employment, Exchange rate arrangements, Exchange rate flexibility, Foreign exchange, Labor

Keywords: Conventional peg, Costs of factor mobility, Employment, Exchange rate arrangements, Exchange rate flexibility, Global, Home economy producer, Labor market, Labor reallocation cost, Labor-mobility cost, Marginal product of labor, Mobility cost c, Price level, Reallocation cost, Time cost, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/039
Stock No:

WPIEA0391992
ISBN:

9781451845747
ISSN:

1018-5941

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