Discussion paper

DP2116 Structural Convergence Under Reversible and Irreversible Monetary Unification

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, temporary divergence occurs, and unification is most likely to
be delayed.

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Citation

Beetsma, R and H Jensen (1999), ‘DP2116 Structural Convergence Under Reversible and Irreversible Monetary Unification‘, CEPR Discussion Paper No. 2116. CEPR Press, Paris & London. https://cepr.org/publications/dp2116