Optimal Currency Areas and Customs Unions: Are They Connected?
نویسندگان
چکیده
This paper examines the link between currency unions and customs unions. The size of a bloc of countries practising some form of co-ordination of monetary policy is limited by the incentive to free-ride that formation of the bloc creates. However, when the threat of a trade war is introduced, the stable size of the bloc increases. This suggests that a) large currency areas are more likely to emerge where it combines with a customs union and b) that the stability of both currency area and customs union is closely related, as the threat of tari penalties can enforce monetary co-operation. Journal of Economic Literature number: F33, F42
منابع مشابه
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