Monetary Integration in the Ex-Soviet Union: A 'Union of Four'?

22 Pages Posted: 8 May 2006

See all articles by Vladimir Chaplygin

Vladimir Chaplygin

Kaliningrad State Technical University

Andrew J. Hughes

Cardiff Business School; Centre for Economic Policy Research (CEPR); Vanderbilt University - College of Arts and Science - Department of Economics

Christian R. Richter

Loughborough University - Department of Economics

Abstract

The governments of four ex-Soviet countries recently discussed forming a currency union. To examine the economic feasibility of this proposition, we use conventional techniques and show that the arrangement is likely to find it difficult to handle the lack of structural symmetry, the asymmetric pattern of shocks, and the lack of market flexibility among the potential participants. Moreover, the union would be a unilateral one. It would require an unusual degree of political commitment to survive. Nonetheless, there are some subtleties in the timing and pattern of mutual dependence between Russia and Kazakhstan, and to a lesser extent in Belarus, which may reduce the strain from a currency union in those countries. Otherwise, the black market will have to provide the necessary market flexibility.

Suggested Citation

Chaplygin, Vladimir and Hughes Hallett, Andrew J. and Richter, Christian R., Monetary Integration in the Ex-Soviet Union: A 'Union of Four'?. Economics of Transition, Vol. 14, No. 1, pp. 47-68, January 2006, Available at SSRN: https://ssrn.com/abstract=878804 or http://dx.doi.org/10.1111/j.1468-0351.2006.00234.x

Vladimir Chaplygin

Kaliningrad State Technical University

+7 4152 232 427 (Phone)

Andrew J. Hughes Hallett (Contact Author)

Cardiff Business School ( email )

Aberconway Building
Cardiff CF10 3EU
United Kingdom
+44 292 087 001 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
615-322-8539 (Phone)
615-343-8495 (Fax)

Christian R. Richter

Loughborough University - Department of Economics ( email )

York House
Loughborough LE11 3TU
Great Britain

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