Groll, Dominik; Monacelli, Tommaso - 2016
commitment, flexible exchange rates generally dominate a monetary union (or fixed exchange rate) regime. Under discretion, this … result is overturned: a monetary union dominates flexible exchange rates. By fixing the nominal exchange rate, a benevolent … exchange rate) is a cost under commitment, whereas it is a benefit under discretion, for it acts like a commitment device. …