Currencies, competition, and clans

Evžen Kočenda, Jan Hanousek and Dirk Engelmann

Journal of Policy Modeling, 2008, vol. 30, issue 6, 1115-1132

Abstract: We present a theoretical and empirical analysis of stable coexistence among the world's anchor currencies (G3): the dollar, euro and yen. The theoretical model presented in this paper builds on a model of spatial competition and rests on a set of assumptions related to the behavior of central banks, the working of exchange rate regimes, the geography of money, and international monetary arrangements. We show that stable coexistence in the sense of the pure-strategy equilibrium derived in our model is attainable in the case of two anchor currencies, but not in the case of three. The empirical evidence provides support for the assumptions and conclusions of the model.

Keywords: Exchange; rates; Anchor; currency; Satellite; currency; Exchange; rate; regimes; Central; bank; policy; Monetary; union; Spatial; competition; Geography; of; money (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Instability in Exchange Rates of the World Leading Currencies: Implications of a Spatial Competition Model among Central Banks (2004)
Working Paper: Instability in Exchange Rates of the World Leading Currencies: Implications of a Spatial Competition Model among Central Banks (Currencies, Competition, and Clans) (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:30:y:2008:i:6:p:1115-1132

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