Lecture：MonetaryUnion(国际金融南开,胡春田)s.docVIP

Lecture 8：Monetary Unions (Currency Union) (Optimal Currency Area) Definition: 狹義 single currency 廣義 Difference from: fixed pegged Benefits: A. enhance the fn of money as a numeraire（N種價格→1種價格） medium of exchange（不必兌換） store of value（mere stable price） B. economies of scale.（精力不必花在交易、花在生產上） Costs: 當shocks導致equil. real exchange rate變，但又同時存在wages (nominal) price stickiness時，會有cost ∵if W P flexible(new equil. real ER ∴E fixed or flexible 不重要 但若E固定or E=1 (by single currency) (real ER不能變，∴可能導致A區unemployment↑，output↓ Optimal Currency Area: Mundell (1961): degree of factor mobility factor mobility low(monetary union undesirable (2 currencies) implication: breaking an existing MU is optimal Area A Area B, demand switched from A→B A: excess supply (unemployment ↑) B: excess demand (labor D↑) labor mobil(moves form A→B labor mkt new equil. labor immobil(二地相對價格需動 P A↓ P B↑ Assume A’s real exchange rate is REA = S P B/P A S = 1 (single currency) S fixed or flexible (two currencies) To eliminate excess supply in area A, REA↑ is needed If price flexible (S = 1) P A↓ P B↑即可， If price sticky ( S flexible OK S fixed or = 1(Y A↓ ∵ If factors immobil, W, P sticky, abandon S (joining a MU) 可能(Y↓ McKinnon (1963): When (S((RE so to eliminate ES in area A depends on an economy’s degree of openness (Y T/Y N) Suppose cty A has a CA deficit, to correct deficit, we need RE↑ depreciate, i.e. RE↑ ( 生產導向 → traded goods sector 消費 → nontraded goods sector Prices are sticky in the SR，so it is needed to have S↑( RE↑ (flex ok) Mckinnon: In an open economy S↑( dRE/dS = 0 ∵S↑( SP T↑( CPI↑( W↑( P N T↑ ∴SP T/P N T same But in a closed economy ∵ 1. Y T share小 ( SP T佔CPI weight小，CPI( W上升有限 S↑( SP T/P N↑ 2. Y N share 大，即使消費偏向Y N，P N上升有限 ∴conclusion: closed economy: S flex ( not join MU open economy: S fixed ( join MU US與EU member比: US share小，EU member彼此大(MU EU與US share小( not MU 與JP Kenen(1969): diversification（生產與出口結構）