Conditions for an Optimality of an Optimum Currency Area

G.D. Demopoulos and N.A. Yannacopoulos

DEOS Working Papers from Athens University of Economics and Business

Abstract: Two approaches to the theory of OCA are distinguished in this paper. The first attempts to define the OCA from the point of view of a single country, and the second examines the optimality of a currency area of a given size anf membership. The present paper after reviewing the drawbacks of the marginalistic approach which looks at the determination of a currency area from the point of view of a single country, deals with the second approach, and argues that a currency area is optimal when the welfare functions of its constituent members are in the core.

Keywords: GAME THEORY; MONETARY AREAS; CURRENCIES (search for similar items in EconPapers)
JEL-codes: C61 C71 F31 (search for similar items in EconPapers)
Pages: 12 pages
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:aue:wpaper:0098-02

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