The Endogeneity of the Optimum Currency Area Criteria：（最优货币区标准的内生性）.pdfVIP

The Endogeneity of the Optimum Currency Area Criteria Jeffrey A. Frankel and Andrew K. Rose* REVISED DRAFT: September 25, 1997 Abstract A country’s suitability for entry into a currency union depends on a number of economic conditions. These include, inter alia, the intensity of trade with other potential members of the currency union, and the extent to which domestic business cycles are correlated with those of the other countries. But international trade patterns and international business cycle correlations are endogenous. This paper develops and investigates the relationship between the two phenomenon. Using thirty years of data for twenty industrialized countries, we uncover a strong and striking empirical finding: countries with closer trade links tend to have more tightly correlated business cycles. It follows that countries are more likely to satisfy the criteria for entry into a currency union after taking steps toward economic integration than before. JEL Classification Numbers: F15, F41 Keywords: international; trade; integration; business cycle; empirical; instrumental variables. Jeffrey A. Frankel Andrew K. Rose, Economics Department Haas School of Business University of California University of California Berkeley, CA 94720-3880 Berkeley, CA 94720-1900 Tel: (510) 642-8084 Tel: (510) 642-6609 Fax: (510) 642-6615 Fax: (510) 642-4700 E-mail: frankel@econ.berkeley.edu E-mail: arose@haas.berkeley.edu * Frankel is Professor of Economics in the Economics Department at the University of California, Berkeley, and Director of the NBERs Internatio