The political feasibility of optimal monetary policy in a currency union with exit options

2022 Fiscal Year Final Research Report

• Project/Area Number: 19K23239
• Research Category: Grant-in-Aid for Research Activity Start-up
• Allocation Type: Multi-year Fund
• Review Section: 0107:Economics, business administration, and related fields
• Research Institution: Hokkaido University (2022); Kobe International University (2019-2021)
• Principal Investigator: Yuta Saito 北海道大学, 経済学研究院, 講師 (80847822)
• Project Period (FY): 2019-08-30 – 2023-03-31
• Keywords: 通貨同盟 / 金融政策 / 時間非整合性

Outline of Final Research Achievements

The two main outcomes of the study are.
(1) Using a currency union model consisting of developing and developed countries, it is shown that the higher the probability of a country leaving a currency union, the higher the proportion of developing countries within the currency union is required to implement optimal monetary policy.
(2) We considered a model in which a member country would have to pay an exogenous social cost if it exited the currency union. The exiting country can implement discretionary monetary policy, but suffers from a time incompatibility problem as in Barro and Gordon (1983). In their model, they show that optimal monetary policy is only feasible if there is no probability that any country will exit from the monetary union.

Free Research Field

マクロ経済学

Academic Significance and Societal Importance of the Research Achievements

本研究は、通貨同盟における退出オプションの存在が、加盟国の集団的な金融政策の選択に与える影響を分析したものである。ギリシャ危機やBrexitなど、経済通貨同盟からの離脱行動が欧州で大きな社会問題となっていたが、経済学的な観点から言えることは限られていた。本研究は、ある加盟国の離脱やその可能性の上昇は、通貨同盟における通貨の期待インフレ率に影響を与え、インフレーションバイアスを引き起こす可能性があることを示した。