Leaving EMU: a real options perspective
نویسنده
چکیده
We examine the real option implicit in a country’s decision of whether to leave an existing monetary union when there is uncertainty over the future benefits of this move. Our theoretical model is calibrated for the current Euro-12 area by proxying policymakers’ inflation preferences with unemployment rates and debt-to-GDP ratios. We observe a robust group of countries that would choose to remain within EMU consisting of Belgium, Finland, Greece and Italy; France and Spain loosely also belong to this core. Only Luxembourg would robustly want to leave EMU; Ireland and the Netherlands, however, complement that core closely.
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