Abstract
Several countries face the choice between targeting inflation independently and entering a monetary union that targets inflation. The present paper extends the theory of optimum currency areas to deal with this choice. In contrast to the conventional theory, countries might form more of an optimum currency area the more asymmetric supply shocks are.
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RØisland, Ø., Torvik, R. Optimum Currency Areas Under Inflation Targeting. Open Economies Review 14, 99–118 (2003). https://doi.org/10.1023/A:1022331412107
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DOI: https://doi.org/10.1023/A:1022331412107