SSE/EFI Working Paper Series in Economics and Finance
Should Finland and Sweden Form a Monetary Union?
() and Fredrik Sjöholm
Abstract: This paper surveys the future exchange rate policy of
Finland and Sweden using the theory of optimal currency areas as a
framework for the analysis. We examine which countries are most suitable to
form a currency union with Finland and Sweden. The Finnish and Swedish
economies display great similarities regarding industrial structure,
business cycle patterns, migration and the design of economic policies.
There are substantial differences between on the one hand Finland and
Sweden, and on the other, many EU countries which are potential members of
a future EMU. Our calculations give support for a Finnish-Swedish currency
union and put a Finnish-Swedish membership of the EMU into question. Our
results stress the importance of Finnish-Swedish co-operation in monetary
matters. This could take many forms, of which a monetary union is one.
Keywords: Monetary integration; optimum currency areas; Finland; Sweden.; (follow links to similar papers)
JEL-Codes: F33; (follow links to similar papers)
30 pages, February 26, 1998
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- This paper is forthcoming as:
Jonung, Lars and Fredrik Sjöholm, 'Should Finland and Sweden Form a Monetary Union?', The World Economy.
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