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No, you can set up a currency union just fine if you cease your mercantilist inflation policies.

Or you can insist on mercantilist inflation policies, in which case you can't have a functioning currency union.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 12:04:44 PM EST
[ Parent ]
Or you can have a currency union and be as mercantilist as you want, as long as the currency union includes fiscal transfer mechanisms.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Jan 12th, 2011 at 12:06:25 PM EST
[ Parent ]
Currency union; no unilateral transfers to deficit countries; low inflation.

Pick any two.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jan 12th, 2011 at 12:12:36 PM EST
[ Parent ]

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