Strategic Games and Currency areas

George D. Demopoulos and Nicholas A. Yannacopoulos
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George D. Demopoulos: Athens University of Economics and Business
Nicholas A. Yannacopoulos: Athens University of Economics and Business

No 201501, Working Papers from Athens University Of Economics and Business, Department of Economics

Abstract: The requirement that a country with a current account surplus should have an expanding money supply, while a country with a current account deficit a contracting mo- ney supply (the “rules of the game”) is an important element for the stability of a cu- rrency area. We argue in this paper, that decentralized behaviour of member countries does not guarantee that the “rule of the game” are respected, and this leads the currency area to equilibria, however, with systemic distortions1.

Keywords: Currency areas; dynamics of economic integration; stability equilibrium conditions. (search for similar items in EconPapers)
JEL-codes: C62 E32 F15 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2015-01
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