Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189137 
Authors: 
Year of Publication: 
1991
Series/Report no.: 
Queen's Economics Department Working Paper No. 813
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This research considers the positive theory of monetary integration in a general equilibrium monetary model of the world economy. The analysis demonstrates that, in the face of uncertainty and incomplete asset markets, participation in a monetary union may be welfare improving since it facilitates state-dependent resource transfers between regional economies. Such resource transfers are used to optimally reduce the variance of consumption for a risk averse agents. This potential for improving welfare depends not only on the agents' risk aversion but on the interrelationship of the regional economies: contrary to Mundell (1961), economically diverse regions may be well suited to a common currency.
Document Type: 
Working Paper

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