Back to Search
Start Over
Currency Areas in Theory and Practice.
- Source :
- Economic Record; Jun2005, Vol. 81 Issue 253, p166-176, 11p
- Publication Year :
- 2005
-
Abstract
- The dominant theoretical framework for analysing currency domains, optimum currency area (OCA) theory, has a miserable record in explaining actual currency area formation, expansion or dissolution. Ministates use foreign currencies to avoid high transactions costs; otherwise countries want control over their monetary policy. Nations do not tolerate multiple currencies, because they complicate public revenue and expenditure decisions. These arguments regarding control of monetary policy and content of fiscal policy differ from the OCA theory's emphasis on a trade-off between the microeconomic transactions costs benefits of a wider currency area and the macroeconomic policy benefits of a narrower currency area. [ABSTRACT FROM AUTHOR]
- Subjects :
- MONEY
MONETARY theory
FISCAL policy
ECONOMIC policy
EXCHANGE
FINANCE
Subjects
Details
- Language :
- English
- ISSN :
- 00130249
- Volume :
- 81
- Issue :
- 253
- Database :
- Complementary Index
- Journal :
- Economic Record
- Publication Type :
- Academic Journal
- Accession number :
- 17065352
- Full Text :
- https://doi.org/10.1111/j.1475-4932.2005.00241.x