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Currency Unions
The past twenty years have seen two waves of research on currency unions, prompted by the early experience of the European Economic and Monetary Union and by the existential crisis experienced by the euro area as a part of the global financial crisis. Alongside an original introduction, this important collection assembles key papers exploring a range of themes in these two waves of research, including subtopics such as reassessment of optimal currency area theory, new views on the policy choices, and the past and present experience of various currency unions. With a concluding section that addresses the question of complementary institutions going beyond an inflation-focused central bank, this two-volume collection provides an ample and comprehensive overview of currency unions.
More Information
Contributors
Contents
More Information
The past twenty years have seen two waves of research on currency unions, prompted by the early experience of the European Economic and Monetary Union and by the existential crisis experienced by the euro area as a part of the global financial crisis. Alongside an original introduction, this important collection assembles key papers exploring a range of themes in these two waves of research, including subtopics such as reassessment of optimal currency area theory, new views on the policy choices, and the past and present experience of various currency unions. With a concluding section that addresses the question of complementary institutions going beyond an inflation-focused central bank, this two-volume collection provides an ample and comprehensive overview of currency unions.
Contributors
48 articles, dating from 1999 to 2019
Contributors include: V. Acharya, B. Eichengreen, E. Farhi, G. Gopinath, P. Grauwe, P. Kehoe, P. Lane, J. Rogers, A. Rose, S. Tenreyro
Contributors include: V. Acharya, B. Eichengreen, E. Farhi, G. Gopinath, P. Grauwe, P. Kehoe, P. Lane, J. Rogers, A. Rose, S. Tenreyro
Contents
Contents:
Volume I
Acknowledgements
Introduction Fadi Hassan, Patrick Honohan and Davide Romelli
PART I OPTIMAL CURRENCY AREAS [153pp]
1. Harris Dellas and George S. Tavlas (2009), ‘An Optimum-Currency-Area Odyssey’, Journal of International Money and Finance, 28 (7), November, 1117–37 [21]
2. Alberto Alesina, Robert J. Barro and Silvana Tenreyro (2002), ‘Optimal Currency Areas’, NBER Macroeconomics Annual 2002, 17, 301–345 [45]
3. Jeffrey A. Frankel and Andrew K. Rose (1998), ‘The Endogeneity of the Optimum Currency Area Criteria ’, Economic Journal, 108 (449), July, 1009–25 [17]
4. Mark Aguiar, Manuel Amador, Emmanuel Farhi and Gita Gopinath (2015), ‘Coordination and Crisis in Monetary Unions’, Quarterly Journal of Economics, 130 (4), November, 1727–79 [53]
5. Pierre-Richard Agénor and Joshua Aizenman (2011), ‘Capital Market Imperfections and the Theory of Optimum Currency Areas’, Journal of International Money and Finance, 30 (8), December, 1659–75 [17]
PART II POLICY CHOICES FOR THE UNION AND ITS MEMBERS [275pp]
6. Pierpaolo Benigno (2004), ‘Optimal Monetary Policy in a Currency Union’, Journal of International Economics, 63 (2), July, 293–320 [28]
7. Saroj Bhattarai, Jae Won Lee and Woong Yong Park (2015), ‘Optimal Monetary Policy in a Currency Union with Interest Rate Speeds’, Journal of International Economics, 96 (2), July, 375–97 [23]
8. Emmanuel Farhi and Ivan Werning (2017), ‘Fiscal Unions’, American Economic Review, 107 (12), December, 3788–834 [47]
9. Michael P. Evers (2012), ‘Federal Fiscal Transfer Rules for a Currency Union’, European Economic Review, 56 (3), April, 507–25 [19]
10. Jordi Galí and Tommaso Monacelli (2008), ‘Optimal Monetary and Fiscal Policy in a Currency Union’, Journal of International Economics, 76 (1), September, 116–32 [17]
11. Andrea Ferrero (2009), ‘Fiscal and Monetary Rules for a Currency Union’, Journal of International Economics, 77 (1), February, 1–10 [10]
12. Carlos Garcia-de-Andoain, Florian Heider, Marie Hoerova and Simone Manganelli (2016), ‘Lending-of-Last-Resort Is As Lending-of-Last-Resort Does: Central Bank Liquidity Provision and Interbank Market Functioning in the Euro Area‘, Journal of Financial Intermediation, 28, October, 32–47 [16]
13. Itamar Drechsler, Thomas Drechsel, David Marques-Ibanez and Philipp Schnabl (2016), ‘Who Borrows from the Lender of Last Resort?’, Journal of Finance, 71 (5), October, 1933–74 [42]
14. Paul De Grauwe (2013), ‘The European Central Bank as Lender of Last resort in the Government Bond Markets’, CESifo Economic Studies, 59 (3), September, 520–35 [16]
15. Karl Whelan (2014), ‘TARGET2 and Central Bank Balance Sheets’, Economic Policy, 29 (1), January, 81–137 [57]
PART III THE ECONOMIC IMPACT OF CURRENCY UNION MEMBERSHIP [241pp]
16. Philip R. Lane (2006), ‘The Real Effects of European Monetary Union’, Journal of Economic Perspectives, 20 (4), Fall, 47–66 [20]
17. Reuven Glick and Andrew K. Rose (2016), ‘Currency Unions and Trade: A Post-EMU Reassessment’, European Economic Review, 87, August, 78–91 [14]
18. Patrick Honohan and Phillip R. Lane (2003), ‘Divergent Inflation Rates in EMU’, Economic Policy, 18 (37), October, 359–94 [36]
19. Claude Lopez and David H. Papell (2012), ‘Convergence of Euro Area Inflation Rates’, Journal of International Money and Finance, 31 (6), October, 1440–58 [19]
20. John H. Rogers (2007), ‘Monetary Union, Price Level Convergence and Inflation: How Close is Europe to the USA?’, Journal of Monetary Economics, 54 (3), February, 785–96 [12]
21. Alberto Cavallo, Brent Neiman and Roberto Rigobon (2014), ‘Currency Unions, Product Introductions, and the Real Exchange Rate’, Quarterly Journal of Economics, 129 (2), May, 529–95 [67]
22. Söhnke M. Bartram and Yaw-Huei Wang (2015), ‘European Financial Market Dependence: An Industry Analysis’, Journal of Banking and Finance, 59, October, 146–63 [18]
23. Michael Ehrmann, Marcel Fratzscher, Refet S. Gürkaynak and Eric T. Swanson (2011), ‘Convergence and Anchoring of Yield Curves in the Euro Area’, Review of Economics and Statistics, 93 (1), February, 350–364 [15]
24. Fabio Canova, Matteo Ciccarelli and Eva Ortega (2007), ‘Similarities and Convergence in G-7 Cycles’, Journal of Monetary Economics, 54 (3), April, 850–78 [29]
25. Paul De Grauwe and Yuemei Ji (2015), ‘Has the Eurozone Become Less Fragile? Some Empirical Tests’, Journal of Policy Modeling, 37 (3), May-June, 404–14 [11]
Volume II
PART I THE EURO AREA CRISIS [319pp]
1. Philip R. Lane (2012), ‘The European Sovereign Debt Crisis’, Journal of Economic Perspectives, 26 (3), Summer, 49–67 [19]
2. Jay C. Shambaugh (2012), ‘The Euro’s Three Crises’, Brookings Papers on Economic Activity, Spring, 157–231 [75]
3. Marcel Fratzscher, Marco lo Duca and Roland Straub (2016), ‘ECB Unconventional Monetary Policy: Market Impact and International Spillovers’, IMF Economic Review, 64 (1), May, 36–74 [39]
4. Philippe Martin and Thomas Philippon (2017), ‘Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone’, American Economic Review, 107 (7), July, 1904–37 [34]
5. Viral Acharya, Itamar Drechsler and Philipp Schnabl (2014), ‘A Pyrrhic Victory? Bank Bailouts and Sovereign Credit Risk’, Journal of Finance, 69 (6), December, 2689–739 [51]
6. Emmanuel Farhi and Jean Tirole (2018), ‘Deadly Embrace: Sovereign and Financial Balance Sheets Doom Loops’, Review of Economic Studies, 85 (3), July, 1781–823 [43]
7. Barry Eichengreen (2010), ‘The Breakup of the Euro Area’ in Alberto Alesina and Francesco Giavazzi (eds), Europe and the Euro, Chicago, IL, USA: University of Chicago Press, February, 11–51 [41]
8. Felix Roth, Lars Jonung and Felicitas Nowak-Lehmann D. (2016), ‘Crisis and Public Support for the Euro, 1990–2014’, Journal of Common Market Studies, 54 (4), July, 944–60 [17]
PART II OTHER CURRENCY UNIONS [83pp]
9. Kevin H. O’Rourke and Alan M. Taylor (2013), ‘Cross of Euros’, Journal of Economic Perspectives, 27 (3), Summer, 167–92 [26]
10. Richard Pomfret (2016), ‘Currency Union and Disunion in Europe and the Former Soviet Union’, CESifo Forum, 17 (4), December, 43–7 [5]
11. Andrew K. Rose and Charles Engel (2002), ‘Currency Unions and International Integration’, Journal of Money, Credit and Banking, 34 (4), November, 1067–89 [23]
12. Cécile Couharde, Issiaka Coulibaly, David Guerreiro and Valérie Mignon (2013), ‘Revisiting the Theory of Optimum Currency Areas: Is the CFA Franc Zone Sustainable’, Journal of Macroeconomics, 38 (B), December, 428–41 [14]
13. Steven K. Buigut and Neven T. Valev (2005), ‘Is the Proposed East African Monetary Union an Optimal Currency Area? A Structural Vector Autoregression Analysis’, World Development, 33 (12), December, 2119–33 [15]
PART III COMPLEMENTARY INSTITUTIONS AND POLITICAL ISSUES [183pp]
14. Enrico Spolaore (2013), ‘What is European Integration Really About? A Political Guide for Economists’, Journal of Economic Perspectives, 27 (3), Summer, 125–44 [20]
15. David Schäfer (2016), ‘A Banking Union of Ideas? The Impact of Ordoliberalism and the Vicious Circle on the EU Banking Union’, Journal of Common Market Studies, 54 (4), July, 961–80 [20]
16. Daniel Gros and Dirk Schoenmaker (2014), ‘European Deposit Insurance and Resolution in the Banking Union’, Journal of Common Market Studies, 52 (3), May, 529–46 [18]
17. Charles Goodhart and Dirk Schoenmaker (2009), ‘Fiscal Burden Sharing in Cross-Border Banking Crises’, International Journal of Central Banking, 5, March, 141–65 [25]
18. Carlo Favero and Alessandro Missale and Thorsten Beck (2012), ‘Sovereign Spreads in the Eurozone: Which Prospects for a Eurobond?’, Economic Policy, 27 (70), April, 233–73 [41]
19. Markus K. Brunnermeier, Sam Langfield, Marco Pagano, Ricardo Reis, Stijn Van Nieuwerburgh and Dimitri Vayanos (2017), ‘ESBies: Safety in the Tranches’, Economic Policy, 32 (90), April, 177–219 [43]
20. Varadarajan V. Chari and Patrick J. Kehoe (2007), ‘On the Need for Fiscal Constraints in a Monetary Union’, Journal of Monetary Economics, 54 (8), November, 2399–408 [10]
21. Ricardo Reis (2013), ‘The Mystique Surrounding the Central Bank’s Balance Sheet, Applied to the European Crisis’, American Economic Review, 103 (3), May, 135–40 [6]
Volume I
Acknowledgements
Introduction Fadi Hassan, Patrick Honohan and Davide Romelli
PART I OPTIMAL CURRENCY AREAS [153pp]
1. Harris Dellas and George S. Tavlas (2009), ‘An Optimum-Currency-Area Odyssey’, Journal of International Money and Finance, 28 (7), November, 1117–37 [21]
2. Alberto Alesina, Robert J. Barro and Silvana Tenreyro (2002), ‘Optimal Currency Areas’, NBER Macroeconomics Annual 2002, 17, 301–345 [45]
3. Jeffrey A. Frankel and Andrew K. Rose (1998), ‘The Endogeneity of the Optimum Currency Area Criteria ’, Economic Journal, 108 (449), July, 1009–25 [17]
4. Mark Aguiar, Manuel Amador, Emmanuel Farhi and Gita Gopinath (2015), ‘Coordination and Crisis in Monetary Unions’, Quarterly Journal of Economics, 130 (4), November, 1727–79 [53]
5. Pierre-Richard Agénor and Joshua Aizenman (2011), ‘Capital Market Imperfections and the Theory of Optimum Currency Areas’, Journal of International Money and Finance, 30 (8), December, 1659–75 [17]
PART II POLICY CHOICES FOR THE UNION AND ITS MEMBERS [275pp]
6. Pierpaolo Benigno (2004), ‘Optimal Monetary Policy in a Currency Union’, Journal of International Economics, 63 (2), July, 293–320 [28]
7. Saroj Bhattarai, Jae Won Lee and Woong Yong Park (2015), ‘Optimal Monetary Policy in a Currency Union with Interest Rate Speeds’, Journal of International Economics, 96 (2), July, 375–97 [23]
8. Emmanuel Farhi and Ivan Werning (2017), ‘Fiscal Unions’, American Economic Review, 107 (12), December, 3788–834 [47]
9. Michael P. Evers (2012), ‘Federal Fiscal Transfer Rules for a Currency Union’, European Economic Review, 56 (3), April, 507–25 [19]
10. Jordi Galí and Tommaso Monacelli (2008), ‘Optimal Monetary and Fiscal Policy in a Currency Union’, Journal of International Economics, 76 (1), September, 116–32 [17]
11. Andrea Ferrero (2009), ‘Fiscal and Monetary Rules for a Currency Union’, Journal of International Economics, 77 (1), February, 1–10 [10]
12. Carlos Garcia-de-Andoain, Florian Heider, Marie Hoerova and Simone Manganelli (2016), ‘Lending-of-Last-Resort Is As Lending-of-Last-Resort Does: Central Bank Liquidity Provision and Interbank Market Functioning in the Euro Area‘, Journal of Financial Intermediation, 28, October, 32–47 [16]
13. Itamar Drechsler, Thomas Drechsel, David Marques-Ibanez and Philipp Schnabl (2016), ‘Who Borrows from the Lender of Last Resort?’, Journal of Finance, 71 (5), October, 1933–74 [42]
14. Paul De Grauwe (2013), ‘The European Central Bank as Lender of Last resort in the Government Bond Markets’, CESifo Economic Studies, 59 (3), September, 520–35 [16]
15. Karl Whelan (2014), ‘TARGET2 and Central Bank Balance Sheets’, Economic Policy, 29 (1), January, 81–137 [57]
PART III THE ECONOMIC IMPACT OF CURRENCY UNION MEMBERSHIP [241pp]
16. Philip R. Lane (2006), ‘The Real Effects of European Monetary Union’, Journal of Economic Perspectives, 20 (4), Fall, 47–66 [20]
17. Reuven Glick and Andrew K. Rose (2016), ‘Currency Unions and Trade: A Post-EMU Reassessment’, European Economic Review, 87, August, 78–91 [14]
18. Patrick Honohan and Phillip R. Lane (2003), ‘Divergent Inflation Rates in EMU’, Economic Policy, 18 (37), October, 359–94 [36]
19. Claude Lopez and David H. Papell (2012), ‘Convergence of Euro Area Inflation Rates’, Journal of International Money and Finance, 31 (6), October, 1440–58 [19]
20. John H. Rogers (2007), ‘Monetary Union, Price Level Convergence and Inflation: How Close is Europe to the USA?’, Journal of Monetary Economics, 54 (3), February, 785–96 [12]
21. Alberto Cavallo, Brent Neiman and Roberto Rigobon (2014), ‘Currency Unions, Product Introductions, and the Real Exchange Rate’, Quarterly Journal of Economics, 129 (2), May, 529–95 [67]
22. Söhnke M. Bartram and Yaw-Huei Wang (2015), ‘European Financial Market Dependence: An Industry Analysis’, Journal of Banking and Finance, 59, October, 146–63 [18]
23. Michael Ehrmann, Marcel Fratzscher, Refet S. Gürkaynak and Eric T. Swanson (2011), ‘Convergence and Anchoring of Yield Curves in the Euro Area’, Review of Economics and Statistics, 93 (1), February, 350–364 [15]
24. Fabio Canova, Matteo Ciccarelli and Eva Ortega (2007), ‘Similarities and Convergence in G-7 Cycles’, Journal of Monetary Economics, 54 (3), April, 850–78 [29]
25. Paul De Grauwe and Yuemei Ji (2015), ‘Has the Eurozone Become Less Fragile? Some Empirical Tests’, Journal of Policy Modeling, 37 (3), May-June, 404–14 [11]
Volume II
PART I THE EURO AREA CRISIS [319pp]
1. Philip R. Lane (2012), ‘The European Sovereign Debt Crisis’, Journal of Economic Perspectives, 26 (3), Summer, 49–67 [19]
2. Jay C. Shambaugh (2012), ‘The Euro’s Three Crises’, Brookings Papers on Economic Activity, Spring, 157–231 [75]
3. Marcel Fratzscher, Marco lo Duca and Roland Straub (2016), ‘ECB Unconventional Monetary Policy: Market Impact and International Spillovers’, IMF Economic Review, 64 (1), May, 36–74 [39]
4. Philippe Martin and Thomas Philippon (2017), ‘Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone’, American Economic Review, 107 (7), July, 1904–37 [34]
5. Viral Acharya, Itamar Drechsler and Philipp Schnabl (2014), ‘A Pyrrhic Victory? Bank Bailouts and Sovereign Credit Risk’, Journal of Finance, 69 (6), December, 2689–739 [51]
6. Emmanuel Farhi and Jean Tirole (2018), ‘Deadly Embrace: Sovereign and Financial Balance Sheets Doom Loops’, Review of Economic Studies, 85 (3), July, 1781–823 [43]
7. Barry Eichengreen (2010), ‘The Breakup of the Euro Area’ in Alberto Alesina and Francesco Giavazzi (eds), Europe and the Euro, Chicago, IL, USA: University of Chicago Press, February, 11–51 [41]
8. Felix Roth, Lars Jonung and Felicitas Nowak-Lehmann D. (2016), ‘Crisis and Public Support for the Euro, 1990–2014’, Journal of Common Market Studies, 54 (4), July, 944–60 [17]
PART II OTHER CURRENCY UNIONS [83pp]
9. Kevin H. O’Rourke and Alan M. Taylor (2013), ‘Cross of Euros’, Journal of Economic Perspectives, 27 (3), Summer, 167–92 [26]
10. Richard Pomfret (2016), ‘Currency Union and Disunion in Europe and the Former Soviet Union’, CESifo Forum, 17 (4), December, 43–7 [5]
11. Andrew K. Rose and Charles Engel (2002), ‘Currency Unions and International Integration’, Journal of Money, Credit and Banking, 34 (4), November, 1067–89 [23]
12. Cécile Couharde, Issiaka Coulibaly, David Guerreiro and Valérie Mignon (2013), ‘Revisiting the Theory of Optimum Currency Areas: Is the CFA Franc Zone Sustainable’, Journal of Macroeconomics, 38 (B), December, 428–41 [14]
13. Steven K. Buigut and Neven T. Valev (2005), ‘Is the Proposed East African Monetary Union an Optimal Currency Area? A Structural Vector Autoregression Analysis’, World Development, 33 (12), December, 2119–33 [15]
PART III COMPLEMENTARY INSTITUTIONS AND POLITICAL ISSUES [183pp]
14. Enrico Spolaore (2013), ‘What is European Integration Really About? A Political Guide for Economists’, Journal of Economic Perspectives, 27 (3), Summer, 125–44 [20]
15. David Schäfer (2016), ‘A Banking Union of Ideas? The Impact of Ordoliberalism and the Vicious Circle on the EU Banking Union’, Journal of Common Market Studies, 54 (4), July, 961–80 [20]
16. Daniel Gros and Dirk Schoenmaker (2014), ‘European Deposit Insurance and Resolution in the Banking Union’, Journal of Common Market Studies, 52 (3), May, 529–46 [18]
17. Charles Goodhart and Dirk Schoenmaker (2009), ‘Fiscal Burden Sharing in Cross-Border Banking Crises’, International Journal of Central Banking, 5, March, 141–65 [25]
18. Carlo Favero and Alessandro Missale and Thorsten Beck (2012), ‘Sovereign Spreads in the Eurozone: Which Prospects for a Eurobond?’, Economic Policy, 27 (70), April, 233–73 [41]
19. Markus K. Brunnermeier, Sam Langfield, Marco Pagano, Ricardo Reis, Stijn Van Nieuwerburgh and Dimitri Vayanos (2017), ‘ESBies: Safety in the Tranches’, Economic Policy, 32 (90), April, 177–219 [43]
20. Varadarajan V. Chari and Patrick J. Kehoe (2007), ‘On the Need for Fiscal Constraints in a Monetary Union’, Journal of Monetary Economics, 54 (8), November, 2399–408 [10]
21. Ricardo Reis (2013), ‘The Mystique Surrounding the Central Bank’s Balance Sheet, Applied to the European Crisis’, American Economic Review, 103 (3), May, 135–40 [6]
