ABSTRACT
Thus far we have been concerned with the benefits and costs of fixed and flexible exchange rates from the standpoint either of a single country or of the world as a whole. We now turn our attention to the question of the benefits and costs associated with the formation of a monetary union. 1 As we will see, the theory of monetary unions is a special case of the kind of analysis we have already undertaken in previous chapters. We want, now, to see if we can decide what kinds of considerations are important in determining which countries, if any, should join together in a monetary union.
