Self-validating optimum currency areas
Giancarlo Corsetti
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Self-validating optimum currency areas
Published
2002
Publisher
National Bureau of Economic Research
Pages
24
Description
"A currency area can be a self-validating optimal policy regime, even when monetary unification does not foster real economic integration and intra-industry trade. In our model, firms choose the optimal degree of exchange rate pass-through to export prices while accounting for expected monetary policies, and monetary authorities choose optimal policy rules while taking firms' pass-through as given. We show that there exist two equilibria, each of which defines a self-validating currency regime. In the first, firms preset prices in domestic currency and let prices in foreign currency be determined by the law of one price. Optimal policy rules then target the domestic output gap, and floating exchange rates support the flex-price allocation. In the second equilibrium, firms preset prices in consumer currency, and a monetary union is the optimal policy choice for all countries. Although a common currency helps synchronize business cycles across countries, flexible exchange rates deliver a superior welfare outcome"--Federal Reserve Bank of New York web site.
Subjects
Trade Your Way to Financial Freedom
Economics of monetary union
The genesis of the Latin Monetary Union
And the weak suffer what they must?
Practical issues arising from the introduction of the Euro
Implications of the euro
Frequently Asked Questions
How many pages are in Self-validating optimum currency areas?
This edition of Self-validating optimum currency areas has approximately 24 pages. Please note, this is an estimate and the exact page count can vary between hardcover, paperback, and e-book versions.
How long does it take to read Self-validating optimum currency areas?
For most readers, Self-validating optimum currency areas typically takes between 30m and 20m to complete. This is based on the book's length of approximately 6,000 words and common reading speeds.
Here's a detailed breakdown: • Continuous reading at 250 WPM: approximately 24m of focused reading • Casual reading (30 minutes/day): you could finish in roughly 1 day • Estimated word count: 6,000 words
Your individual reading time will vary based on your personal reading pace, the amount of daily reading time, and your familiarity with the subject matter.
What is the word count of Self-validating optimum currency areas?
The estimated word count for Self-validating optimum currency areas is approximately 6,000 words. This figure is calculated using industry-standard methods that consider genre-specific word density patterns, typical formatting and layout characteristics, and standard words-per-page ratios for published books.
This is an approximation — actual word count may vary based on font size, formatting, edition, and the presence of illustrations or charts.
Who is the author of Self-validating optimum currency areas?
Self-validating optimum currency areas was written by Giancarlo Corsetti.
When was Self-validating optimum currency areas published?
The publication date for this specific edition is 2002. The original work may have been published on a different date.