International Money and Common Currencies in Historical Perspective

29 Pages Posted: 25 Jun 2002  

Gerald P. Dwyer

Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

James R. Lothian

Gabelli School of Business, Fordham University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2003

Abstract

The authors review the history of international monies and the theory related to their adoption and use. There are four key characteristics of these currencies: high unitary value; relatively low inflation rates for long periods; issuance by major economic and trading powers; and spontaneous, as opposed to planned, adoption internationally. The economic theory of the demand for money provides support for the importance of these characteristics. The value of a unit is arbitrary for a fiat money, but the other characteristics are likely to be important for determining any fiat money that will be the international money in the future. If the euro continues to exist for the next half century or so and has a relatively stable value, the authors conclude that the euro is likely to be serious competition for the dollar as the international money.

Keywords: Euro, international money, fiat money, dollar, search theory

JEL Classification: E42, F33, N10

Suggested Citation

Dwyer, Gerald P. and Lothian, James R., International Money and Common Currencies in Historical Perspective (March 2003). Federal Reserve Bank of Atlanta Working Paper 2002-7; CEIS Tor Vergata - Research Paper Series No. 9. Available at SSRN: https://ssrn.com/abstract=315081 or http://dx.doi.org/10.2139/ssrn.315081

Gerald P. Dwyer (Contact Author)

Clemson University ( email )

Department of Economics
Clemson University
Clemson, SC 29634
United States

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

James R. Lothian

Gabelli School of Business, Fordham University ( email )

113 West 60th Street
New York, NY 10023
United States
212-636-6147 (Phone)
212-765-5573 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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