Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152902
Authors: 
De Grauwe, Paul
Mongelli, Francesco Paolo
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 468
Abstract: 
This paper brings together several strands of the literature on the endogenous effects of monetary integration: i.e., whether sharing a single currency may set in motion forces bringing countries closer together. The start of EMU has spurred a new interest in this debate. Four areas are analysed: the endogeneity of economic integration, in which we look primarily at evidence on prices and trade; the endogeneity of financial integration or equivalently of insurance schemes based on capital markets; the endogeneity of symmetry of shocks; and the endogeneity of product and labour market flexibility. We present diverse arguments and, where possible, explore the incipient empirical literature focussing on the euro area. Our preliminary conclusion is one of moderate optimism. The different endogeneities that exist in the dynamics towards optimum currency areas are at work. How strong these endogeneities are and how quickly they will do their work remains to be seen.
Subjects: 
Economic and Monetary Integration and EMU
Optimum Currency Area
JEL: 
E42
F13
F33
F42
Document Type: 
Working Paper

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