Do Currency Unions Grow Too Large For Their Own Good?  

Oleh:

Maloney, John ; Macmillen, Malcolm

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 109 no. 458 (Oct. 1999), page 572-587.
Fulltext: 572.pdf (272.0KB)

Isi artikel

This article puts a rigorous foundation under the proposition that currency areas, as they admit more members, face a rising marginal cost curve which cuts the marginal bene®t curve from below. However, at any given time, the median member faces lower marginal cost than the average member, so that, if new members are admitted by majority vote, and existing members are myopic, the currency area will expand beyond its optimum size. Although the currency area imposes negative externalities on countries outside it, we ®nd that the existence of one currency union has no effect on the costs or bene®ts of forming or enlarging another.

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