To Be or Not to Be a Euro Country? The Behavioural Political Economics of Currency Unions

37 Pages Posted: 18 Jul 2018

See all articles by Donato Masciandaro

Donato Masciandaro

Bocconi University - Department of Economics

Davide Romelli

Trinity College (Dublin) - Department of Economics; Trinity College (Dublin)

Date Written: July 2018

Abstract

The aim of this paper is to use a behavioural political economy approach to revise the standard approach of optimal currency areas, and applying it to the Eurozone case. We discuss the pros and cons of the Euro membership if behavioural biases - prospect theory - influence the citizens and consequently the political actors. The theoretical framework is used to analyse in general under which conditions the Euro irreversibility assumption is likely to hold and specifically the support in favour of the Euro membership in a country case.

Suggested Citation

Masciandaro, Donato and Romelli, Davide, To Be or Not to Be a Euro Country? The Behavioural Political Economics of Currency Unions (July 2018). BAFFI CAREFIN Centre Research Paper No. 2018-83. Available at SSRN: https://ssrn.com/abstract=3215795 or http://dx.doi.org/10.2139/ssrn.3215795

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Davide Romelli

Trinity College (Dublin) - Department of Economics ( email )

Arts Building
Room 3014
Dublin
Ireland

Trinity College (Dublin) ( email )

2-3 College Green
Dublin, Leinster
Ireland

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