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Currency blocs in the 21st century

Christoph Fischer

No 24/2012, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: Based on a classification of countries and territories according to their regime and anchor currency choice, the study considers the two major currency blocs of the present world. A nested logit regression suggests that long-term structural economic variables determine a given country's currency bloc affiliation. The dollar bloc differs from the euro bloc in that there exists a group of countries that peg temporarily to the US dollar without having close economic affinities with the bloc. The estimated parameters are consistent with an additive random utility model interpretation. A currency bloc equilibrium in the spirit of Alesina and Barro (2002) is derived empirically. Keywords: anchor currency choice, nested logit, exchange rate regime classification, additive random utility model, currency bloc equilibrium JEL-Classification: F02, F31, F33, E42, C25

JEL-codes: F02 F31 F33 E42 C25 (search for similar items in EconPapers)
Date: 2012-10-15
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Working Paper: Currency blocs in the 21st century (2011) Downloads
Working Paper: Currency blocs in the 21st century (2011) Downloads
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