The inherent benefit of monetary unions

• 成果类型: Article
• 署名作者: Groll, Dominik; Monacelli, Tommaso
• 署名单位: Leibniz Association; Institut fur Weltwirtschaft an der Universitat Kiel (IFW); Bocconi University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.01.016
• 发表日期: 2020
• 页码: 63-79
• 关键词: Monetary union; Flexible exchange rates; COMMITMENT; DISCRETION; Welfare losses; nominal rigidities

摘要

If the monetary authority lacks commitment, a monetary union can dominate flexible exchange rates. With forward-looking staggered pricing, inertia in the terms of trade- induced by a fixed exchange rate-is a benefit under discretion, since it acts like a commitment device. By trading off flexibility in the adjustment of the terms of trade, the monetary authority improves on its ability to manage private sector's expectations. The higher the incidence of asymmetric inefficient shocks, and/or the higher the degree of nominal price rigidity, the greater the inherent benefit of monetary unions, in stark contrast to the traditional optimum currency area theory. (C) 2019 Elsevier B.V. All rights reserved.