On The Welfare Benefits of an International Currency
Electronic Access:
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Summary:
Is it beneficial for a country's currency to be used internationally? And, if so, can we quantify the benefit? Since the emergence of the euro, there has been great interest in the consequences of a transfer of the US dollar's premier international role to the euro. Building on recent advancements in the literature on search models of money, this paper presents a novel model-based approach towards assessing the welfare benefits associated with the international use of a country's currency. The welfare gain for the Euro area in having the euro internationally used ranges from 1.7% to 2.1% of consumption.
Series:
Working Paper No. 2007/049
Subject:
Consumption Currencies Demand for money Inflation Monetary base
English
Publication Date:
March 1, 2007
ISBN/ISSN:
9781451866131/1018-5941
Stock No:
WPIEA2007049
Pages:
37
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