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Currency Unions in Prospect and Retrospect

João Santos Silva () and Silvana Tenreyro ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We critically review the recent literature on currency unions, and discuss the methodological challenges posed by the empirical assessment of their costs and benefits. In the process, we provide evidence on the economic effects of the euro. In particular, and in contrast with estimates of the trade effect of other currency unions, we find that the impact of the euro on trade has been close to zero. After reviewing the costs and benefits, we conclude with some open questions on normative and positive aspects of the theory of currency unions, emphasizing the need for a unified welfare-based framework to weigh their costs and gains.

Keywords: Currency union; Integration; Exchange Rage; Trade (search for similar items in EconPapers)
JEL-codes: F00 F02 F15 F31 F42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-int and nep-mon
Date: 2010-06
References: View references in EconPapers View complete reference list from CitEc
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Journal Article: Currency Unions in Prospect and Retrospect (2010) Downloads
Working Paper: Currency Unions in Prospect and Retrospect (2010) Downloads
Working Paper: Currency unions in prospect and retrospect (2010) Downloads
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