Have a Break, Have a... National Currency: When Do Monetary Unions Fall Apart?

Volker Nitsch

No 1113, CESifo Working Paper Series from CESifo

Abstract: Historically, dissolutions of currency unions are not unusual. I use an annual panel data set covering 245 country pairs that use a common currency (of which 128 are dissolved) from 1948 through 1997 to characterize currency union exits. I find that departures from a currency union tend to occur when there is a large inflation differential between member countries, when the currency union involves a country which is closed to international trade and trade flows dry up, and when there is a change in the political status of a member. In general, however, macroeconomic factors have only little predictive power for currency union dissolutions.

Keywords: monetary union; sovereign currency; dissolution; exit (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-his, nep-ifn and nep-mon
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Citations: View citations in EconPapers (3)

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Working Paper: Have a Break, Have A... National Currency: When Do Monetary Unions Fall Apart? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1113

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