Optimum Currency Area in Europe: An Alternative Evaluation

Optimum Currency Area in Europe: An Alternative Evaluation

In this paper we explore an alternative scheme to assess the suitability of adopting a common currency by Western European countries. It is based on the role of common regional shocks in the determination of output. The results show that the OCA theory well explains and predicts participation decisi...

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Bibliographic Details
Main Authors: KIM, Yoonbai, CHOW, Hwee Kwan
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2003
Subjects:
Optimum currency area
Alternative index
Regional shocks vs. Country-specific shocks
EMU participation
Macroeconomics
Online Access:https://ink.library.smu.edu.sg/soe_research/180
https://ink.library.smu.edu.sg/context/soe_research/article/1179/viewcontent/Optimum_currency_area_in_Europe_2003.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:In this paper we explore an alternative scheme to assess the suitability of adopting a common currency by Western European countries. It is based on the role of common regional shocks in the determination of output. The results show that the OCA theory well explains and predicts participation decisions in EMU. We also find that our OCA index is highly consistent with two popular schemes that have been introduced by Bayoumi and Eichengreen.

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