TY - JOUR
T1 - A stochastic simulation model of an optimum currency area
AU - Beine, Michel
AU - Docquier, Frédéric
PY - 1998
Y1 - 1998
N2 - In this paper, we develop a two-country stochastic simulation model based on the theory of optimum currency areas, which studies the desirability of a monetary union. Extending the general equilibrium model of Ricci (1995), we introduce the intertemporal dimension, which allows to deal more accurately with labor mobility and shock dynamics. We analyse the importance of shocks asymmetries and investigate the role of labor mobility. Furthermore, we illustrate the influence of trade openness and the impact of a fiscal federalism system, assuming a specific transfer allocation rule based on the relative evolution of unemployment between the two countries.
AB - In this paper, we develop a two-country stochastic simulation model based on the theory of optimum currency areas, which studies the desirability of a monetary union. Extending the general equilibrium model of Ricci (1995), we introduce the intertemporal dimension, which allows to deal more accurately with labor mobility and shock dynamics. We analyse the importance of shocks asymmetries and investigate the role of labor mobility. Furthermore, we illustrate the influence of trade openness and the impact of a fiscal federalism system, assuming a specific transfer allocation rule based on the relative evolution of unemployment between the two countries.
KW - Fiscal federalism
KW - International labor mobility
KW - Optimum currency area
UR - http://www.scopus.com/inward/record.url?scp=11544304182&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:11544304182
SN - 0923-7992
VL - 9
SP - 227
EP - 255
JO - Open Economies Review
JF - Open Economies Review
IS - 3
ER -