02203nam a2200277 a 4500 1/51384 080128s2008 be u pdd 1 a0eng d 9789279082337 1016-8060 (print) 1725-3187 (online) KC-AI-08-308-EN-C 37290 GR-PeUP ΚΕΤ Αλφαβητική σειρά Consetti, Giancarlo. A modern reconsideration of the theory of optimal currency areas / Giancarlo Consetti. Brussels- Belgium: European Comission: Directorate-General for Economic and Financial Affairs, 2008. 39 σ.: διαγ. πιν. 30 εκ. European Economy. Economic papers ; Economic Papers What can be learnt from revisiting the Optimal Currency Areas (OCA) theory 50 years from its birth, in light of recent advances in open economy macro and monetary theory? This paper presents a stylized micro-founded model of the costs of adopting a common currency, relative to an ideal benchmark in which domestic monetary authorities pursue country-specific efficient stabilization. Costs from (a) limiting monetary autonomy and (b) giving up exchange rate flexibility are examined in turn. These costs will generally be of the same magnitude as the costs of the business cycle. However, to the extent that exchange rates do not perform the stabilizing role envisioned by traditional OCA theory, a common monetary policy can be as efficient as nationally differentiated policies, even when shocks are strongly asymmetric, provided that the composition of aggregate spending tends to be symmetric at union-wide level. Convergence in consumption (and spending) patterns thus emerges as a possible novel attribute of countries participating in an efficient currency area. European Commission : Directorate-General for Economic and Financial Affairs. Economic Papers March 2008, No 308. European Economy. Economic papers ; 308. INST UNIPILB KET 20090303 EEEP 308 EEEP 308 NOLOAN 23 1 http://ec.europa.eu/economy_finance/publications/publication_summary12231_en.htm