To Be or not to Be a Euro Country? The Behavioural Political Economics of Currency Unions

Donato Masciandaro () and Davide Romelli

No 1883, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: The aim of this paper is to use a behavioural political economy approach to revise the standard approach of optimal currency areas, and applying it to the Eurozone case. We discuss the pros and cons of the Euro membership if behavioural biases - prospect theory - influence the citizens and consequently the political actors. The theoretical framework is used to analyse in general under which conditions the Euro irreversibility assumption is likely to hold and specifically the support in favour of the Euro membership in a country case.

Pages: 37 pages
Date: 2018
New Economics Papers: this item is included in nep-eec, nep-mon, nep-pol and nep-upt
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