US-France Cooperative Research: Optimal Design and Equilibrium Outcomes

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0340587CooperThe primary objective of this three-year U.S.-France cooperative research project in economics is to study various forms of monetary union. The U.S. investigator, Russell W. Cooper of Boston University and the National Bureau of Economic Research, and the French investigator, Hubert Kempf of the Universite de Paris I (Sorbonne), have successfully worked together on issues related to costs and benefits of monetary union. This project addresses in depth new questions related to fiscal constraints in monetary union and partition into national currency areas. They will perform equilibrium analysis and evaluate optimal allocations. The effects of trade on a common currency and interaction between monetary union and financial crises will be addressed.The proposed research relates to a number of existing policy issues. Many issues associated with the design of a monetary union remain open in the context of the European Monetary Union. In particular, there is ongoing discussion over fiscal constraints and criteria for admission. Their work also relates to ongoing discussions of the adoption of the dollar as currency by Ecuador and the debate over this issue in Argentina.The National Science Foundation (NSF) and the Centre National de la Recherche Scientifique (CNRS) jointly support this project. NSF will cover the cost of visits to France by the U.S. investigator. The CNRS provides support to the French investigator for travel to the United States.