Currency options for emerging economies: Concepts and arguments
This paper frames policy debates around the appropriate choice of currency regimes for developing and transition economies, by clarifying and articulating arguments drawn from the scientific and applied economics literatures. In particular, arguments for, and against, "fixed" vs. "flexible" exchange rate regimes are elaborated and evaluated, including the celebrated "insulation" hypothesis of Friedman and "optimum currency area" concept of Mundell. Political economy arguments are also considered, including in the context of (actual) European and (putative) North American currency unions. The paper concludes with some policy-relevant reflections on currency options for emerging economies, and alternative visions for the future of the international monetary architecture.
|Keywords||Currency regime, Dollarization, Euroization, Fixed vs. flexible exchange rates, Impossible trinity, Monetary/exchange rate policy|
Dehejia, V. (2004). Currency options for emerging economies: Concepts and arguments. Ekonomicky casopis, 52(4), 462–480.