Using a gravity equation, Andrew Rose finds that currency-union countries trade more intensively with each other than do other country pairs, and others report same result. Using a nonparametric test, however, Persson finds that trade flows between currency-union countries are not significantly...

This chapter discusses history of international transactions and relationships that were introduced into macroeconomic models and policy in the twenty-five years following the Second World War. Modern models of exchange-rate determination focus sharply on money and bond markets. The chapter...