Macroeconomic coordination and monetary unions in a N-country world: Do all roads lead to Rome?
In Europe, twelve countries have joined a currency union but four have stayed out. The EU enlargement process implies a large set of potential EMU entrants. In Latin America, two countries have recently dollarized and regional currencies have also been a recurring theme. We develop a theoretical mod...
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| Autores principales: | , |
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| Formato: | Documento de trabajo acceptedVersion |
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Universidad Torcuato Di Tella. Escuela de Negocios. Centro de Investigaciones en Finanzas (CIF)
2017
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| Acceso en línea: | http://repositorio.utdt.edu/handle/utdt/6270 |
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| Sumario: | In Europe, twelve countries have joined a currency union but four have stayed out. The EU enlargement process implies a large set of potential EMU entrants. In Latin America, two countries have recently dollarized and regional currencies have also been a recurring theme. We develop a theoretical model in which countries are exposed to real and monetary shocks of both a systemic and individual nature. The model suggests when countries should float, form a CU or fix to an anchor as a function of their sensitivity to systemic shocks and the size of individual shocks. In an empirical analysis we consider a set of countries in Latin America. We find that what is beneficial for a given country depends on the actions of others. Integration may then be path dependent, and all roads may not lead to Rome. |
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