Citation

Discussion Paper Details

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Title: Voting on the Adoption of a Common Currency

Author(s): Alessandra Casella

Publication Date: October 1991

Keyword(s): Common Currency, Transaction Costs and Voting

Programme Area(s): International Macroeconomics

Abstract: Two countries adopting a common currency share the same monetary policy and save on transaction costs. This paper studies the impact of these two factors on the composition of markets. The establishment of a monetary union alters the boundaries between domestic and international markets and triggers distributional effects, creating disagreement among citizens over the desirability of the union. The outcome of a referendum on the choice between national currencies and monetary union depends on the country's level of development, suggesting that a common currency will be favoured by a majority of traders in both countries only at a particular stage.

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Bibliographic Reference

Casella, A. 1991. 'Voting on the Adoption of a Common Currency'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=595