Working Paper: CEPR ID: DP591
Authors: Alberto Giovannini
Abstract: The paper discusses the policy problems involved in replacing several national currencies with a single currency in a monetary union. While these problems are of general interest, the analysis is motivated by the plan for Economic and Monetary Union among the members of the European Community. The issues discussed include the choice of conversion rates and the effects of exchange rate devaluations at the time of the monetary reform.
Keywords: currency reform; exchange rate devaluation
JEL Codes: E42; F33; F36; G15; G20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| choice of conversion rates (F31) | relative prices (P22) |
| incorrect application of conversion rates (F31) | economic distortions (H31) |
| government mandated conversion rates (F31) | real payments made by private agents (H39) |
| conversion rates reflecting anticipated depreciation (F31) | minimize welfare costs (I30) |