We analyze monetary policy in a currency union with sovereign risk by using a three-country model including a two-country currency union and introduce an ad hoc assumption that one of the two countries is exposed to sovereign risk. In our model, if expected fiscal revenue is less than current...

This study investigates how the Asian Monetary Unit (AMU) deviation indicators for surveillance of East Asian currencies are improved by changing their benchmark rates from the constant 2000–2001 rates to time-varying ones based on purchasing power parities (PPPs). Consumer price indexes...