Special Topics in Economics Econ. 491. Chapter 3: Optimum Currency Area ( OCA ). The currency crises in Mexico (1994), Asia (1997), Russia (1998),& Brazil (1999) have fueled the debate on the optimal choice of exchange rate regimes.
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Special Topics in Economics Econ. 491
Optimum Currency Area
( OCA )
(Unified Common Currency– Unified Central Bank )
2) The region is subject primarily to common shocks that affect the entire area similarly & not to shocks that affect sub-regions differently. How!!
3) Labor is mobile within the region. How!!
4) A tax-transfer system exists to transfer resources from sub-regions performing strongly to those performing poorly. How!!