{
  "title": "A Model of an Optimum Currency Area",
  "publication": "IMF Working Papers, June 1, 1997",
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  "summary": "This paper investigates the circumstances under which it is beneficial to participate in a currency area. A two-country monetary model of trade with nominal rigidities encompasses the real and monetary arguments suggested by the optimum currency area literature: correlation of real shocks, internati",
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    {
      "heading": "Summary",
      "content": "- Title: A Model of an Optimum Currency Area\n- Author: Luca A Ricci\n- Publication date: June 1, 1997\n- Type: IMF Working Paper (Working Paper No. 1997/076)\n- Core question: Investigates the circumstances under which it is beneficial to participate in a currency area."
    },
    {
      "heading": "Model and mechanisms analyzed",
      "content": "- Framework: A two-country monetary model of trade with nominal rigidities.\n- The model encompasses the real and monetary arguments from the optimum currency area literature, specifically:\n  - correlation of real shocks\n  - international factor mobility\n  - fiscal adjustment\n  - openness\n  - difference in national inflationary biases\n  - correlation of monetary shocks\n  - benefits of a single currency"
    },
    {
      "heading": "Key findings",
      "content": "- The effect of openness on net benefits is ambiguous, contrary to the usual argument that more open economies are better candidates for a currency area.\n- Countries do not necessarily agree on whether a given currency union should be created.\n- The paper integrates both real and monetary considerations in assessing net benefits of currency union participation."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Cost-benefit analysis of joining a currency union must account simultaneously for:\n  - real shock correlations and their cross-country covariance\n  - international factor mobility (including labor mobility)\n  - fiscal adjustment capacities and redistribution properties\n  - monetary biases and the correlation of monetary policy shocks\n  - potential benefits from adopting a single currency\n- Openness should not be treated as a unambiguous criterion favoring currency union membership; policy conclusions about optimal membership depend on the full set of model parameters and the relative weight of the listed mechanisms.\n- Because countries may reach different assessments of net benefits, voluntary agreement on creating a currency union cannot be assumed.\n\n---\n\n Content in this bundle\n\n- A Model if an Optimum Currency Area\n  - A Model if an Optimum Currency Area (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - A Model if an Optimum Currency Area (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/a-model-of-an-optimum-currency-area-2254"
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    "Authors: Luca A Ricci",
    "Published: June 1, 1997",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451849837.001",
    "Title: A Model of an Optimum Currency Area",
    "Author: Luca A Ricci",
    "Publication date: June 1, 1997",
    "Type: IMF Working Paper (Working Paper No. 1997/076)",
    "Core question: Investigates the circumstances under which it is beneficial to participate in a currency area.",
    "Framework: A two-country monetary model of trade with nominal rigidities.",
    "The model encompasses the real and monetary arguments from the optimum currency area literature, specifically:",
    "The effect of openness on net benefits is ambiguous, contrary to the usual argument that more open economies are better candidates for a currency area.",
    "Countries do not necessarily agree on whether a given currency union should be created.",
    "The paper integrates both real and monetary considerations in assessing net benefits of currency union participation.",
    "Cost-benefit analysis of joining a currency union must account simultaneously for:",
    "Openness should not be treated as a unambiguous criterion favoring currency union membership; policy conclusions about optimal membership depend on the full set of model parameters and the relative weight of the listed mechanisms.",
    "Because countries may reach different assessments of net benefits, voluntary agreement on creating a currency union cannot be assumed.",
    "**A Model if an Optimum Currency Area**"
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