Ogawa and Shimizu (2005) proposed an Asian Monetary Unit (AMU), which is a common currency basket composed of ASEAN plus three Asian currencies, and AMU Deviation Indicators (AMU DIs), which indicates deviations of each Asian currency in terms of the AMU compared to the benchmark rate. In this...

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...