MARC Record from Library of Congress

LEADER: 02153cam a22003017a 4500
001 2005617017
003 DLC
005 20050509102914.0
007 cr |||||||||||
008 050301s2002 nyu sb f000 0 eng
010 $a 2005617017
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aCorsetti, Giancarlo.
245 10 $aSelf-validating optimum currency areas$h[electronic resource] /$cGiancarlo Corsetti and Paolo Pesenti.
260 $a[New York, N.Y.] :$bFederal Reserve Bank of New York,$c[2002]
490 1 $aStaff reports ;$vno. 152
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 3/1/2005.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"A currency area can be a self-validating optimal policy regime, even when monetary unification does not foster real economic integration and intra-industry trade. In our model, firms choose the optimal degree of exchange rate pass-through to export prices while accounting for expected monetary policies, and monetary authorities choose optimal policy rules while taking firms' pass-through as given. We show that there exist two equilibria, each of which defines a self-validating currency regime. In the first, firms preset prices in domestic currency and let prices in foreign currency be determined by the law of one price. Optimal policy rules then target the domestic output gap, and floating exchange rates support the flex-price allocation. In the second equilibrium, firms preset prices in consumer currency, and a monetary union is the optimal policy choice for all countries. Although a common currency helps synchronize business cycles across countries, flexible exchange rates deliver a superior welfare outcome"--Federal Reserve Bank of New York web site.
650 0 $aMonetary unions.
700 1 $aPesenti, Paolo A.
710 2 $aFederal Reserve Bank of New York.
830 0 $aStaff reports (Federal Reserve Bank of New York : Online) ;$vno. 152.
856 40 $uhttp://www.ny.frb.org/research/staff_reports/sr152.html