Economics at your fingertips  

Frankel and Rose’s Introduction to the Endogeneity of Optimality: A Model Limited to the European Monetary Experience

Alban Mathieu
Additional contact information
Alban Mathieu: Laboratoire TRIANGLE, Maison des Sciences de l’Homme, Lyon

Economic Alternatives, 2021, issue 2, 299-314

Abstract: This article discusses Frankel and Rose’s (1997,1998) introduction to endogeneity, which was the result of scrutinizing the optimal currency area (OCA) theory through the evaluative lens of European monetary integration and unification in the 1990s. It cannot be generalized to another monetary union. The development of endogeneity interrelates five different criteria (common currency; transaction costs; commercial integration; economic convergence; and diversification of production) to argue that the introduction of a common currency leads to economic convergence among the participating countries. Frankel and Rose’s choice of analytic criteria arises from empirical studies on European monetary unification, following the OCA framework. The empirical studies found to have influenced the authors can be divided into three themes: the microeconomic benefits of a common currency; the optimality of European countries; and adjustment mechanisms. However, as shown by the selection of certain criteria, the influence of the Emerson report (1990), and the price-stability orientation of fiscal and monetary policies, their proposal only works within the monetary and economic conditions of the future eurozone area.

Keywords: money; Monetary currency areas; endogeneity; European monetary union (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Economic Alternatives from University of National and World Economy, Sofia, Bulgaria Contact information at EDIRC.
Bibliographic data for series maintained by Vanya Lazarova ().

Page updated 2022-01-04
Handle: RePEc:nwe:eajour:y:2021:i:2:p:299-314