48 Pages Posted: 19 Jul 2002
Date Written: June 2002
As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.
Suggested Citation: Suggested Citation
Alesina, Alberto F. and Barro, Robert J. and Tenreyro, Silvana, Optimal Currency Areas (June 2002). Harvard Institute Research Working Paper No. 1958. Available at SSRN: https://ssrn.com/abstract=319761 or http://dx.doi.org/10.2139/ssrn.319761