Currency blocs in the 21st century

Christoph Fischer

No 24/2012, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: Based on a classification of countries and territories according to their regime and anchor currency choice, the study considers the two major currency blocs of the present world. A nested logit regression suggests that long-term structural economic variables determine a given country's currency bloc affiliation. The dollar bloc differs from the euro bloc in that there exists a group of countries that peg temporarily to the US dollar without having close economic affinities with the bloc. The estimated parameters are consistent with an additive random utility model interpretation. A currency bloc equilibrium in the spirit of Alesina and Barro (2002) is derived empirically.

Keywords: anchor currency choice; nested logit; exchange rate regime classification; additive random utility model; currency bloc equilibrium (search for similar items in EconPapers)
JEL-codes: C25 E42 F02 F31 F33 (search for similar items in EconPapers)
Date: 2012
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Related works:
Working Paper: Currency blocs in the 21st century (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2012_024

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