The European sovereign debt crisis is characterized by the simultaneous surge in borrowing costs in the GIPS countries after 2008. We present a theory, which can account for the behavior of sovereign bond spreads in Southern Europe between 1998 and 2012. Our key theoretical argument is related...

What is the extent of currency diversification in the international monetary system? How hasit evolved over time? In this paper, we quantify the degree of currency diversification usingregression methods of currency co-movements to determine the extent to which nationalcurrencies across the...

When real wages in an economy no longer reflect productivity, normally devaluations of the currency restore international price-competitiveness via imported inflation that reduces real wages. This instrument is not available in a currency union. The job has to be done by reductions in nominal...

The paper treats the eco currency union project in West Africa and its implications for monetary policies against the backdrop of the international monetary order from a post-Keynesian perspective. The eco zone project envisions a common monetary union of the West African Economic and Monetary...

This paper investigates the monetary regime choice between a monetary union and a flexible exchange rate regime in a large open economy framework. The classical approach argues that a monetary union should be established between countries with positively correlated shocks so that the cost of the...

We introduce "financial imperfections" -- asymmetric net wealth positions, incomplete risk-sharing, and interest rate spreads across member countries -- in a prototypical two-country currency union model and study implications for monetary policy transmission mechanism and optimal policy. In...

In contrast to the popular bipolar view on exchange rate choices, this paper argues that intermediate regimes in general and regional exchange rate systems such as the European Monetary System (EMS) in particular should not be ruled out per se when discussing monetary options for East Asian...

This paper uses a dynamic stochastic general equilibrium model with three countries to study the effects of implementation of an open monetary union on international fluctuations. We consider the effects of unanticipated country specific shocks on technology and government spending. We compare...

The study assesses the level of integration among the three Greater China economies (namely China, Hong Kong, and Taiwan) and examines the suitability of a Greater China currency union. Currently, the three economies have extensive trade and investment linkages. Our analyses show that these...

The prospect of creating a currency union consisting of China, Japan, and Korea is evaluated using output data. After a brief discussion on the interactions between the three countries, the study investigates whether these three countries have common synchronous business cycles, which are...