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| Tekijä: | Canzoneri, M. B. Rogers, C. A. |
| Otsikko: | Is the European Community an optimal currency area? Optimal taxation versus the cost of multiple currencies |
| Lehti: | American Economic Review
1990 : JUN, VOL. 80:3, p. 419-433 |
| Asiasana: | TAXATION EUROPEAN COMMUNITY ECONOMIC INTEGRATION CURRENCY INFLATION TRADE |
| Kieli: | eng |
| Tiivistelmä: | A view of optimal currency areas is presented that is based on the principles of public finance, as the European Community seems to be moving rapidly to economic integration. Inflation taxes are distorted, and an optimum spreading of tax distortions may require high inflation in one region and low inflation in another. Each region would need its own currency to do this. On the other hand, multiple currencies imply valuation and currency conversion costs which impede trade between regions. This tradeoff is explored in the context of the European Community's debate over a common currency, using a two-country variant of a cash-in-advance model. Some illustrative examples are presented. |
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