On The Welfare Benefits of an International Currency

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.
Publication date: March 2007
ISBN: 9781451866131
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Inflation , International currency , Search models of money , inflation , inflation rates , price level , monetary equilibria , monetary equilibrium , Money and Interest Rates: General , International Monetary Arrangements and Institutions , International Curency

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