Working Paper

Monetary Policy as an Optimum Currency Area Criterion


  • Groll
  • D.
Publication Date

Whether countries benefit from forming a monetary union depends critically on the way monetary policy is conducted. This is mainly because monetary policy determines whether and to what extent a flexible nominal exchange rate fosters or hampers macroeconomic stabilization, even if monetary policy does not target the nominal exchange rate explicitly.

Kiel Institute Expert


JEL Classification
F33, F41, E52

Key Words

  • macroeconomic stabilization
  • Monetary union
  • optimum currency area theory
  • trade openness
  • welfare analysis