000141376 001__ 141376
000141376 005__ 20190316234620.0
000141376 037__ $$aREP_WORK
000141376 245__ $$aOn the Benefits of a Monetary Union: does it pay to be bigger?
000141376 269__ $$a2009
000141376 260__ $$bCenter for Fiscal Policy Working Paper Series$$c2009
000141376 336__ $$aWorking Papers
000141376 500__ $$aJEL Classiffication: E52, E61, F4
000141376 520__ $$aA two area dynamic stochastic general equilibrium model is employed to investigate the welfare implications of losing monetary independence. Two policy regimes are compared: (i) in one area there is a common currency, while in the other area countries still retain their autonomous monetary policy; (ii) there are two monetary unions. When chosen by national authorities, monetary policy can stabilize optimally the effects of country-specific shocks. However, in that case, policy decisions internalize neither the spillover effects on consumers living in the same area nor their impact on the world economy. Thus the adoption of a common currency implies a trade-off between the cost of not tailoring monetary policy to single country economic conditions and the gains entailed by the improvement upon the conduct of national monetary policies. Our results show that under markup shocks and plausible calibrations, there may be welfare gains from adopting a common currency.
000141376 6531_ $$aOptimal Monetary Policy
000141376 6531_ $$aCurrency Areas
000141376 6531_ $$aTerms of Trade Externality
000141376 700__ $$aForlati, Chiara
000141376 8564_ $$uhttps://infoscience.epfl.ch/record/141376/files/CFP2009_03_1.pdf$$zn/a$$s609966
000141376 909C0 $$xU11431$$0252269$$pSFI-LL
000141376 909CO $$qGLOBAL_SET$$pworking$$ooai:infoscience.tind.io:141376$$pCDM
000141376 917Z8 $$x196256
000141376 917Z8 $$x196256
000141376 937__ $$aSFI-LL-WORKING-2009-003
000141376 973__ $$sPUBLISHED$$aEPFL
000141376 980__ $$aWORKING