Beetsma, R. and Jensen, H. (2003). Structural Convergence under Reversible and Irreversable Monetary Unification Journal of International Money and Finance, 22(3):417--439.
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Affiliated author
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Publication year2003
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JournalJournal of International Money and Finance
We explore endogenous monetary unification in the context of a model in which a country with serious structural distortions (and, hence, high inflation) is admitted into a monetary union once its economic structure has converged sufficiently towards that of the existing participants. If unification is reversible, so that the new entrant can always be forced to leave the union again later, convergence stops for a while after the high-inflation country has joined. With irreversible unification, in contrast, temporary divergence occurs, and unification will be delayed