Omitted from traditional OCA criteria, price effects are important because regional monetary union protects from pricing risks and contributes to greater uniformity and efficiency in price setting. Among member countries it reduces price dispersion in tradables in part by irrevocably fixing the...

On February 24-25, 2006 an international workshop on “Regional and International Currency Arrangements” was held in Vienna. It was co-sponsored by the Oesterreichische Nationalbank and the Bank of Greece, and jointly organized by Eduard Hochreiter and George Tavlas. Academic economists and...

The choice of exchange rate regime is considered for a small open economy. Assuming that different forms of fixed exchange rate regimes involve different costs of reneging, it is shown that one potential beneficial aspect of joining a monetary union with a common currency is that it is less...

Regional monetary union offers important income and price-level insurance to its members. The welfare gains available through the completion of financial markets from income and consumption insurance alone are especially large. They are much greater than those available from access to...

In this paper we formalize the framework for monetary and exchange rate policy presented in Bofinger and Wollmershäuser [2001a]. We develop a simple comparative static model for an open economy that allows us to discuss monetary policy under the exchange rate strategies of independently...

As trade integration deepens in East Asia, it is expected that there will be closer links in business cycles among East Asian countries. Theoretically, however, increased trade can lead business cycles across trading partners to shift in either direction: while inter-industry trade resulting in...

The cross-country examination of monetary policy transparency scores, economic size and supply slopes produces no clear patterns for the empirical relations in question. This evidence prompts us to formulate a general setup for the study of currency union stabilization when there is monetary...

This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher...

This paper discusses whether the integration of international financial markets affects business cycle fluctuations. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock....

This paper assesses the relevance of the exchange rate regime for stabilization policy. This regime question cannot be dealt with independently of other institutions, in particular how fiscal policy is designed. We show that once fiscal policy is taken into account, the exchange rate regime is...