Currency Unions and the Incentive to Reform: Are Market Mechanisms Enough?

Andrew Hughes Hallett*, Svend E. Hougaard Jensen

*Corresponding author for this work

    Research output: Contribution to journalJournal articleResearchpeer-review


    This paper studies the incentives to join a monetary union under alternative assumptions about the extent of market reform within the union and in the candidate countries. A lack of mobility, wage/price flexibility or diversification opportunities, brings costs for both new entrants and existing union members. That holds whether the lack of reform is in the entrants or in the existing union. Countries will only want to join a union where there has been sufficient reform, and where markets are more flexible than their own. But existing members will want the same properties of their new partners as well.
    Original languageEnglish
    JournalThe North American Journal of Economics and Finance
    Issue number2
    Pages (from-to)139-155
    Publication statusPublished - Jul 2001


    • Monetary union
    • Market flexibility
    • Structural reform

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