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Which Single Currency for Western Europe?
Author(s) -
Kutan Ali M.,
Melvin Michael
Publication year - 1996
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.1996.tb00100.x
Subject(s) - single currency , maastricht treaty , currency , economics , stochastic dominance , dominance (genetics) , portfolio , monetary economics , foreign exchange reserves , international economics , treaty , reserve currency , point (geometry) , foreign exchange risk , financial economics , european integration , econometrics , european union , political science , biochemistry , chemistry , geometry , mathematics , law , gene
The Maastricht Treaty calls for a single European money in the third and final stage of European monetary integration. The purpose of this paper is to infer the preferred currency from the point of view of economic agents in each EMS country by ranking the realized distributions of returns from holding foreign currencies. These rankings are obtained using the notion of generalized stochastic dominance. The preferred currency varies with time and the portfolio considered. In all cases, the ECU is not supported as a likely dominant money.