Choosing an exchange-rate regime is largely a matter of choosing the variables that will bear the brunt of adjustment to shocks and disturbances. Floating rates, supported by inflation-targeting regimes of varying degrees of transparency, have dominated currency arrangements in North America,...

A traditional OCA criterion holds that the more symmetric the shock exposure of countries, the more suited they are for currency union. According to Frankel and Rose (1998, 2002), growing correlation of the ex post income fluctuations of members also can provide endogenous justification for...

There are few recent historical precedents for maintaining the high degree of separation between internal monetary arrangements that still prevails between Hong Kong and Mainland China. This paper anticipates the erosion of this separation and considers the economics of the different forms which...

A traditional OCA criterion holds that the more symmetric the shock exposure of countries, the more suited they are for currency union. According to Frankel and Rose (1998, 2002), growing correlation of the ex post income fluctuations of members also can provide endogenous justification for...

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...