The theory of optimum currency areas states that the more two countries trade with each other, the better candidates they are for a currency union. In terms of the endogeneity argument, convergence follows from joining a currency union and the integration process itself turns the countries into optimal currency areas. The potential increase in trade is regarded as one of the most important benefits of a currency union. Indirect evidence from studies on the effect of exchange rate volatility on trade does not support this claim. Rose argues that the common currency effect on trade is separate from the effect of the elimination of exchange rate variability and finds a large positive effect of a currency union on trade. Although his methodology has met with criticism, most studies find a positive estimate. A meta-analysis of the studies confirms that a common currency has a statistically and economically significant trade-creating effect. / Economics / M.Com. (Economics)

The purpose of the dissertation is to establish a framework with which to assess the prospective gains from regional monetary integration among five neighboring countries in East Africa: Burundi, Kenya, Rwanda, Tanzania, and Uganda. The neo-classical theory assumes that economic and monetary union would stimulate additional growth in such a union as a whole, with the trickle-down effects of overall development, and would enhance factor mobility, solving the problem of regional disparity automatically. Past experiences of African regionalism have shown that countries that participated in a monetary union were able to pursue credible monetary policies. This economic performance has been credited to their monetary policy discipline. Since countries in East Africa are small both in terms of their individual populations and the respective sizes of their economies, the study concludes that regional integration is a useful way of increasing their economic clout and bargaining power on the global scene. / Economics / Thesis (M. Comm.)

La crise financière mondiale qui a débuté en 2008, et la crise des dettes souveraines en zone euro qui l'a suivie, ont successivement forcé les macroéconomistes à repenser leur cadre conceptuel. Cette thèse est une modeste contribution aux efforts colossaux déployés par les macroéconomistes à travers le monde pour faire face à ce défi: renforcer la compréhension de l'utilisation optimale des outils de politique économique non conventionnels. A cette fin, elle est construite en deux parties. Chaque partie vise à explorer au plan théorique un "contexte macroéconomique-type" au sein duquel des outils de politique économique non conventionnels ont été employés ces dernières années. La première partie, intitulée "Politique Non Conventionelle Optimale en Economie Ouverte", analyse l'utilisation optimale d'instruments de politique économique non conventionels par une banque centrale en économie ouverte. En présence de frictions financières qui modifient la manière dont la politique monétaire affecte l'économie, ou en présence de chocs exogènes qui mettent en défaut la "divine coïncidence", cette partie décrit comment un banquier central devrait combiner un instrument de politique monétaire non conventionnelle et la politique monétaire conventionnelle à des fins de stabilisation macroéconomique. La seconde partie, "Politique Budgétaire Optimale en Union Monétaire", adopte le point de vue du gouvernement d'un pays situé en union monétaire (typiquement la zone euro). Un tel pays ne disposant d'une politique monétaire autonome (au plan national), cette partie étudie la possibilité pour un tel pays d'utiliser la politique budgétaire comme un outil de stabilisation, et décrit l'utilisation optimale des dévaluations fiscales en réponse à des chocs exogènes idiosyncratiques. / The 2008 global financial crisis and the subsequent euro area sovereign debt crisis successively forced macroeconomists to reassess this conceptual framework. This thesis is a modest contribution to the huge efforts undertaken by macroeconomists following the crisis to meet this challenge, i.e. to develop some insights about the optimal use of unconventional policy tools. To do so, this thesis is twofold. Each part intends to explore from a theoretical perspective a fundamental macroeconomic situation that called for the use of unconventional policy instruments in the recent years. The first part, ”Optimal Unconventional Policy in An Open Economy” analyzes the optimal use of unconventional policy instruments by the central bank in an open economy framework. Assuming that the presence of financial frictions changes the way monetary policy affects the economy, or that the occurence of exogenous shocks breaks the ”divine coincidence”, this part describes how a central bank should combine an unconventional policy instrument and conventional monetary policy to favor macroeconomic stabilization. The second part, ”Optimal Fiscal Policy in a Currency Union”, takes the standpoint of the governement of a country located in a currency union (typically the euro area). Such a country being deprived of monetary policy autonomy, this part considers the opportunity of using fiscal policy as a stabilization tool, and describes the optimal use of fiscal devaluations following idiosyncratic exogenous shocks.

Cette thèse relève du commerce international, des politiques monétaires et de macroéconomie internationale. Le premier chapitre étudie les différentes caractéristiques des différents régimes de change fixe et évalue les effets de chacune de ces caractéristiques sur le commerce international. Il apparaît que la transparence des prix et les coûts de transaction liés au changement de monnaie n’ont pas d’effet significatif sur le commerce, seule la crédibilité du régime de change fixe (liée à l’absence de possibilité de dévaluation) augmente significativement le commerce. Cela explique pourquoi seule l’union monétaire augmente le commerce entre ses membres dès les premières années du régime de change. Le second chapitre s’intéresse aux effets de l’euro sur le commerce pendant la crise financière de 2008-2009. Il apparaît que l’euro amortit la chute du commerce observée partout dans le monde, grâce à l’absence de volatilité du taux de change entre ses membres. Le troisième chapitre présente un modèle théorique permettant d’étudier la transmission des chocs dans une économie spécialisée verticalement, et propose une politique monétaire optimale pour stabiliser l’économie. Le modèle promeut des politiques monétaires symétriques entre les deux pays partageant un mode de production basé sur les chaînes globales de valeur. / This thesis studies international trade, monetary policy and international macroeconomics. Chapter 1 examines the different characteristics of different fixed exchange rate regimes and assesses the effects of each of these characteristics on international trade. It appears that price transparency and transaction costs linked to the currency changes do not have a significant effect on trade; only the credibility of the fixed exchange rate regime (due to the absence of devaluation possibilities) increases trade significantly. This explains why only monetary union increases trade between its members from the first years of the exchange rate regime. Chapter 2 looks at the effects of the euro on trade during the 2008-2009 financial crisis.It seems that the euro amortized the trade drop observed throughout the world, owing to the absence of exchange rate volatility among its members. Chapter 3 presents a theoretical model to study the transmission of shocks in a vertically specialized economy, and proposes an optimal monetary policy to stabilize the economy. The model promotes symmetrical monetary policies between the two countries sharing a production mode based on global value chains.

This thesis studies the history of the Scandinavian Currency Union, 1873-1924. It is divided into four analytical chapters, each dealing with a different aspect of the Union and each written as a separate paper. The conclusions of the thesis challenge existing views of the Union and examines new aspects of this episode in monetary history. It poses new questions and exploits and evaluates new sources. The first paper offers an original interpretation of the role of Scandinavianism in the monetary reform of 1873-1875. It is argued that its importance has been both exaggerated and misinterpreted. In fact, the monetary integration of those years was principally motivated by economic considerations. The second paper deals with inter Scandinavian monetary cooperation during the period 1873-1914. It argues that the process of monetary integration, later followed by disintegration, during these decades is best understood in the context of a trade off between financial efficiency and national economic vulnerability.  It provides a comprehensive analysis of the motives that underlay the principal extensions of the Union’s institutional framework.This includes, the formation, cancellation and renegotiation of the formal, Union based, clearing agreement, as well as the process leading to the free circulation of all Scandinavian notes throughout the currency area.The third paper studies the level of integration and efficiency of the Scandinavian foreign exchange market throughout the period. The paper applies theories and methods from modern economics and finance on a new set of historical financial data. It concludes that the currency union generally, and the clearing agreement in particular, significantly increased the degree of market integration. It also concludes that, during most of the period, the Scandinavian foreign exchange market was characterized by perfect arbitrage and efficiency. The final paper challenges the prevailing scholarly view of the dissolution of the Union. It argues that the break up resulted from the asymmetric shocks that the three countries experienced during World War I. These shocks, which differed as a result of varying national economic policies and structures, created tensions that required exchange rate adjustments to be resolved. / <p>Diss. Stockholm : Handelshögskolan, 2004</p>

Die vorliegende Dissertation zu makroökonomischen Themen beinhaltet einen einleitenden Literaturüberblick, drei eigenständige und voneinander unabhängige Kapitel sowie einen technischen Anhang. In Kapitel zwei wird ein Zwei-Länder Modell einer Währungsunion betrachtet, in dem die gemeinsame Zentralbank die Wohlfahrt der gesamten Währungsunion maximieren will, während die zwei fiskalpolitischen Akteure vergleichbare, aber minimal abweichende länderspezifische Verlustfunktionen zu minimieren suchen. Das Konkurrenzverhalten dieser drei Institutionen wird in sieben spieltheoretischen Szenarien analysiert. Beim Vergleich einer homogenen mit einer heterogenen Währungsunion lassen sich für letztere deutlich höhere Wohlfahrtsverluste relativ zum sozialen Optimum feststellen. Die Szenarien mit den geringsten Wohlfahrtsverlusten sind Kooperation aller drei Institutionen und eine Stackelberg-Führerschaft der Zentralbank. Kapitel drei untersucht, inwieweit das Verhältnis von Immobilienpreise zum Bruttoinlandsprodukt als langfristig konstant und nur auf Grund von Produktivitätsschocks von seinem Mittelwert abweichend angesehen werden kann. Hierzu wird ein Zwei-Sektoren RBC-Modell für den Immobiliensektor und einen Konsumgütersektor erstellt. Es wird gezeigt, dass ein antizipierter, zukünftiger Schock auf das Produktivitätswachstum im Konsumgütersektor eine sofortige, deutliche Erhöhung der Immobilienpreise relativ zum Bruttoinlandsprodukt zur Folge hat. In Kapitel vier wird gefragt, ob ein typisches Neukeynesianisches Modell "sechs große Rätsel der internationalen Makroökonomie" erklären kann. Die sechs Rätsel werden in Bedingungen für erste und zweite Momente übersetzt und fünf wesentliche Modellparameter geschätzt. Das Ergebnis ist erstaunlich gut: unter anderem können die empirischen Beobachtungen zur Heimatpräferenz wiedergegeben und die Schwankungsbreite des realen Wechselkurses deutlich erhöht werden. Handelskosten sind für dieses Ergebnis ein wesentlicher Faktor. / This dissertation consists of an introductory chapter with an extended literature review, three chapters on individual and independent research topics, and an appendix. Chapter 2 uses a two-country model with a central bank maximizing union-wide welfare and two fiscal authorities minimizing comparable, but slightly different country-wide losses. The rivalry between the three authorities is analyzed in seven static games. Comparing a homogeneous with a heterogeneous monetary union, welfare losses relative to the social optimum are found to be significantly larger in a heterogeneous union. The best-performing scenarios are cooperation between all authorities and monetary leadership. The goal of Chapter 3 is to investigate whether or not it is possible to explain the house price to GDP ratio and the house price to stock price ratio as being generally constant, deviating from its respective mean only because of shocks to productivity? Building a two-sector RBC model for residential and non-residential capital, it is shown that an anticipated future shock to productivity growth in the non-residential sector leads to an immediate large increase in house prices relative to GDP. In Chapter 4, it is asked whether a typical New Keynesian Open Economy Model is able to explain "Six Major Puzzles in International Macroeconomics". After translating the six puzzles into moment conditions for the model, I estimate five parameters to fit the moment conditions implied by the data. Given the simplicity of the model, its fit is surprisingly good: among other things, the home bias puzzles can easily be replicated, the exchange rate volatility is formidably increased and the exchange rate correlation pattern is relatively close to realistic values. Trade costs are one important ingredient for this finding.

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