The Sustainability of Monetary Unions. Can the Euro Survive?

Paolo Canofari, Giancarlo Marini and Giovanni Piersanti

No 226, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: This paper aims to propose a new measure of exchange market pressure for countries operating in hard peg regimes, such as currency unions, currency boards or full dollarization. We use a general model of currency crisis to derive a sustainability index based upon the relationship between the shadow exchange rate and the output gap required to maintain the currency peg. We apply the new index to European Union countries in order to assess the sustainability of the Euro.

Keywords: shadow exchange rate; currency crisis; exchange market pressure (search for similar items in EconPapers)
JEL-codes: F3 F31 F41 G01 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-03-27, Revised 2012-03-27
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: The sustainability of monetary unions. Can the Euro survive? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:rtv:ceisrp:226

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