Trade and the Number of Optimum Currency Areas in the World

CEPR Discussion Paper Series No. 1926

Posted: 4 Dec 1998

See all articles by Jacques Melitz

Jacques Melitz

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre for Economic Policy Research (CEPR)

Date Written: July 1998

Abstract

This paper employs worldwide data on output and bilateral trade in order to identify optimum currency areas (OCA's) on a global basis. By retaining only two of the many criteria that have been mentioned in the literature on OCA's, it has been possible to use computer programming to do the identification. Based on the first of the two criteria, relating to trade, some large continental OCA's can be discerned in the world. Adding the second criterion, which concerns symmetry-of-output-shocks, whittles down the size of the OCA's. Nevertheless, some significant examples remain in the Americas, Europe and Asia, of which the European and the Asiatic are the most noteworthy.

JEL Classification: F02, F15, F40

Suggested Citation

Melitz, Jacques, Trade and the Number of Optimum Currency Areas in the World (July 1998). CEPR Discussion Paper Series No. 1926, Available at SSRN: https://ssrn.com/abstract=137317

Jacques Melitz (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France
+331 41 17 60 46 (Phone)
+331 41 17 60 34 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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