This article reviews currency unions, that is, groups of countries that use a common money. There are a large number of such monetary unions in both the industrial and the developing worlds. I review both the theoretical reasons why countries choose to belong to currency unions and the empirical performance of these unions.
KeywordsAsymmetric shocks Automatic stabilizers Business cycles Capital mobility Countercyclical fiscal policy Currency unions Diversification Economic and Monetary Union (EMU) Exchange rate regimes Inflation Labour mobility Latin Monetary Union Monetary unions see currency unions Mundell, R Optimal currency area Output volatility Progressive taxation Rigidities Scandinavian Monetary Union Size of nations
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