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Wiley InterScience | |||||||||||||||||
  Scottish Journal of Political EconomyVolume 54 Issue 1, Pages 105 - 115 Published Online: 24 Jan 2007 Journal compilation © 2010 Scottish Economic Society Published on behalf of the Scottish Economic Society
Abstract | Full Text: HTML, PDF (Size: 121K) | Related Articles | Citation Tracking  JOINING EUROPEAN MONETARY UNION: A REAL OPTIONS PERSPECTIVE Copyright © 2007 Scottish Economic Society KEYWORDS EMU • real option • calibration KEYWORDS E5 • F3 ABSTRACT
We examine the real option implicit in countries' decisions on whether to join a monetary union when future benefits of this move are uncertain. Our theoretical model is calibrated for the current Euro-12 area and EU-15 outs, proxying policymakers' inflation preferences with unemployment rates, debt-to-GDP and potential-to-actual-GDP ratios. The Euro-12 area is generally ready or close to wanting to expand, whereas the EU-15 outs are unready to make that move at present and have widely varying probabilities of wanting to do so in the future, depending on the measure used. Date of receipt of final manuscript: 16 March 2006. | 
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