The Macroeconomic Cost of Joining a Currency Union

Abstract

This paper's intent is to provide a clear exposition of the macroeconomic cost of joining a currency union. To achieve this end, the paper derives and etnploys loss indifference curves along with short run and long run Phillips curves for the prospective member. The paper concludes that the determinants of the slope of loss indifference curves, and Phillips curves along with the factors that shift the short run Phillips curve dictate the prospective member's macroeconomic cost of joining a currency union. (E58&F33)