On The Welfare Benefits of an International Currency

Prakash Kannan

No 2007/049, IMF Working Papers from International Monetary Fund

Abstract: Is it beneficial for a country's currency to be used internationally? And, if so, can we quantify the benefit? Since the emergence of the euro, there has been great interest in the consequences of a transfer of the US dollar's premier international role to the euro. Building on recent advancements in the literature on search models of money, this paper presents a novel model-based approach towards assessing the welfare benefits associated with the international use of a country's currency. The welfare gain for the Euro area in having the euro internationally used ranges from 1.7% to 2.1% of consumption.

Keywords: WP; inflation rate (search for similar items in EconPapers)
Pages: 37
Date: 2007-03-01
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Citations: View citations in EconPapers (3)

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