Currencies, Competition, and Clans

D Engelmann; J Hanousek; E Kocenda

Currencies, Competition, and Clans

D Engelmann, J Hanousek, E Kocenda

Department of Economics

Research output: Working paper

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Abstract

We present a theoretical and empirical analysis of the question whether stability among the world anchor currencies (G3) is attainable. The theoretical model presented in this paper builds on a model of spatial competition and rests on a set of realistic assumptions related to the behavior of central banks, workings of exchange rate regimes, geography of money, and international monetary arrangements. We show that stability is attainable in the case of two anchor currencies, but not in the case of three. The empirical evidence provides some support for assumptions and conclusions of the model.

Original language	English
Place of Publication	Egham
Publication status	Published - Aug 2006

Keywords

exchange rates
anchor currency
satellite currency
exchange rate regimes
central bank policy
monetary union
spatial competition
geography of money

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http://personal.rhul.ac.uk/unte/247/research.html

Cite this

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