Title: On the optimality of a currency area of a given size
Abstract: A currency area of a given size is an OCA if all its members are better off with a common currency rather than without it. In terms of cooperative game theory this implies that a currency area is an OCA if the benefits of its constituent members are in the core. It is argued in this paper that the existence of the core is independent of the degree of similarity of the constituent members, implying that the criteria proposed by the received theory of OCA for a successful monetary union may not constitute a safe policy guide, and that free factor mobility in the presence of international economies of scale may enhance the case for a common currency.
Publication Year: 2001
Publication Date: 2001-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 11
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