Financial Integration and Monetary Competition

R. Cardarelli and J.-P. Vidal

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper constructs a two-country overlapping generations model with two distinct fiat monies in which seigniorage revenues are used to finance a local public good. Countries differ both in endowments and in the preference for the public good. Under perfect mobility of financial assets, benevolent governments choose their rates of growth of money supply strategically and private individuals have perfect foresight. The authors characterise the equilibrium of the policy game and show how the degree of financial integration affects the welfare of each country. They then consider a currency union and characterise the minimal weights that each country would require in the union's social welfare function to relinquish its monetary power.

Date: 1998
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:cam:camdae:9810

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().