From Currency Unions to a World Currency: A Possibility?

Davide Furceri

No 19, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: The purpose of this paper is to analyze the main macroeconomic determinants of benefits and costs by undertaking processes of monetary integration, and investigate the possibility that currency unions could be lead to the creation of a global currency in the future. In particular, we will consider two main costs and benefits predicted by the theory of Optimum Currency Areas: (i) the business-cycle correlation between the candidate’s economy and that of the currency zone as a whole, and (ii) the candidate economy’s inflationary bias. Using this methodology, the results of the paper provide empirical evidence of the existence of several optimal currency areas in the world. Moreover, the creation of a world common currency area is not as unrealistic as it might seem at first sight.

Keywords: Currency Unions; World Currency (search for similar items in EconPapers)
JEL-codes: E32 F33 F41 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:19

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