Optimm Crrency Areas an the Erpean Experience 国际金融英文.ppt

* * * * * * * * * * * * * * * * * * * * * 20-* Theory of Optimum Currency Areas (cont.) At some critical point measuring the degree of integration, the monetary efficiency gain will exceed the economic stability loss for a member considering joining a fixed exchange rate system. 20-* Theory of Optimum Currency Areas (cont.) 20-* Theory of Optimum Currency Areas (cont.) There could be an event that causes the frequency or magnitude of changes in aggregate demand to increase for a country. If so, the economic stability loss would be greater for every measure of economic integration between a new member and members of a fixed exchange rate system. How would this affect the critical point where the monetary efficiency gain equals economic stability loss? 20-* Theory of Optimum Currency Areas (cont.) 20-* Is the EU an Optimum Currency Area? If the EU/EMS/economic and monetary union can be expected to benefit members, we expect that its members have a high degree of economic integration: large trade volumes as a fraction of GDP a large amount of foreign financial investment and foreign direct investment relative to total investment a large amount of migration across borders as a fraction of total labor force 20-* Is the EU an Optimum Currency Area? (cont.) Most EU members export from 10% to 20% of GDP to other EU members This compares with exports of less than 2% of EU GDP to the US. But trade between regions in the US is a larger fraction of regional GDP. Was trade restricted by regulations that were removed under the Single European Act? 20-* Is the EU an Optimum Currency Area? (cont.) Deviations from the law of one price also occur in many EU markets. If EU markets were greatly integrated, then the (currency adjusted) prices of goods and services should be nearly the same across markets. The price of the same BMW car varies 29.5% between British and Dutch markets. How much does price discrimination occur? 20-* Is the EU an Optimum Currency Area? (cont.) There is