A Model of an Optimum Currency Area

Ricci, Luca

doi:10.2139/ssrn.1716669

Cited by 10 publications

(12 citation statements)

References 64 publications

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“…Formalizing the theory was not easy and took time. Bayoumi (1994) and Ricci (1997) each illustrated some aspects of the theory, as Alesina and Barro (2002) did later. The second difficulty was to use the theory's insights to reach practical conclusions.…”

Section: Why a Monetary Union? The Oca Logicmentioning

confidence: 73%

European Monetary Union: the dark sides of a major success

Wyplosz¹

2006

Economic Policy

206

112

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"This paper revisits the debates that have surrounded the launch of a unique experience: the adoption of a common currency among developed countries. A striking aspect of this history is that, pressed by what they correctly identified as a window of opportunity, policy-makers crafted this complex project in a short period of time, largely eschewing inputs from the academic profession. Academic research, in turn, developed its own views, which turned out to be critical of some ley orientations, yet it generally recognizes that, in the end, the launch of the euro has been a major success." Copyright CEPR, CES, MSH, 2006.

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Section: Why a Monetary Union? The Oca Logicmentioning

confidence: 73%

European Monetary Union: the dark sides of a major success

Wyplosz¹

2006

Economic Policy

206

112

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“…We lay out an estimated two-country DSGE model of the EMU that accounts for the imperfect integration of both goods and financial markets. As in Ricci (1997), the model encompasses real and monetary arguments for the costs of conducting a single monetary policy in a monetary union characterized by business cycle asymmetries and inflation differentials. Indeed, the model features home bias in private consumption and production technology, incomplete and imperfectly integrated private financial markets, Calvo-type sticky prices, and i.i.d.…”

Section: Introductionmentioning

confidence: 99%

The Welfare Gains of Trade Integration in the European Monetary Union

2010

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“…Subsequent literature in this area introduces various rigidities and imperfections into the modelling of currency unions. For example, Bayoumi (1994) and Ricci (2008) represent the literature in which wage and price rigidities are the frictions, while Helpman and Razin (1982) and Neumeyer (1998) use financial market incompleteness as the friction. In the two-period general equilibrium model of Helpman and Razin (1982), a floating exchange rate regime dominates over a fixed exchange rate regime, since the latter reduces the number of assets in the economy.…”

Section: Alternative Exchange Rate Regimesmentioning

confidence: 99%

“…In his model, a currency union can raise the welfare of the regions within the union, but unambiguously lowers welfare for regions outside the union. Ricci (2008) presents a two-country model of the OCAs with nominal rigidities, in which he segregates the variables that increase net benefits from participation in a currency union from the factors that tend to diminish the benefits of monetary unions. One important insight of his model is the ambiguous effects for the degree of openness when both real and monetary shocks are taken into account.…”

Section: Alternative Exchange Rate Regimesmentioning

confidence: 99%

Theory of Optimum Currency Areas

Kunroo

2015

Review of Market Integration

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This article aims at providing an eclectic analysis of the theory of optimum currency areas (OCAs). Although the basic tenets of the theory were anticipated during the late 1940s and the 1950s, the theory was developed and maturated in three highly influential papers of Mundell (1961), McKinnon (1963) and Kenen (1969). However, because of internal conflicts and contradictions, the theory gathered gloom for the next two decades before it could make a solid comeback in the early 1990s. Much of the reason of this revival was the efforts towards the reconciliation of these internal conflicts. During this period, the theory moved beyond the usual cost–benefit analysis and reflected a shift from the criteria that emphasise on the state of the economy towards the criteria that focus on desired policy trade-offs. Recent advancements in the area using dynamic general equilibrium analysis shows that the revival of interest in the theory of OCA reflects developments in a literature that has little to do with the subject of OCAs itself. The merit of the OCA theory is that it helps to bring together several strands of the literature on monetary integration.

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A Model of an Optimum Currency Area

Cited by 10 publications

References 64 publications

European Monetary Union: the dark sides of a major success

European Monetary Union: the dark sides of a major success

The Welfare Gains of Trade Integration in the European Monetary Union

Theory of Optimum Currency Areas

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