A Theory of Optimum Currency Areas: Revisited

Robert Flood and Joshua Aizenman

No 1992/039, IMF Working Papers from International Monetary Fund

Abstract: Starting with Friedman and Mundell the academic literature has conducted a high level debate concerning the design of cross-country monetary arrangements. That debate has become very complex and the data requirements necessary for appropriate application of the principles developed are far beyond the means of the very nations for which the principles might be valuable. In this paper we return to the simplicity of the early arguments and formalize them in a way that may be helpful for currency area decisions where little is known about economic structure.

Keywords: WP; labor market; reallocation cost; mobility cost c; marginal product of labor; home economy producer; time cost; labor-mobility cost; costs of factor mobility; labor reallocation cost; price level; Exchange rate flexibility; Conventional peg; Employment; Exchange rate arrangements; Global (search for similar items in EconPapers)
Pages: 24
Date: 1992-05-01
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Citations: View citations in EconPapers (5)

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