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Migration and risk sharing in currency unions: The euro area versus the US
In his long career, Robert Mundell made a number of influential contributions to international macroeconomics and beyond, elegantly summarised by his fellow Nobel laureate Paul Krugman (Krugman 2021). Mundell (1961), in particular, puts forward a conceptual framework to assess optimum currency areas. In this framework, the notion of labour mobility takes centre stage. Migration across the countries or regions that make up the currency union can serve as a powerful adjustment mechanism which limits the adverse employment effects of asymmetric shocks if a common currency prevents a fast exchange-rate adjustments. And, ... (full story)