Currency Areas: Public Debt, Inflation and Unemployment

Carlos Encinas-Ferrer

Faculty of Business, Universidad De La Salle Bajio, Leon, Mexico.

DOI: 10.4236/ojapps.2014.44021                

Abstract

Can public debt, inflation and unemployment tell us something about optimal or not optimal currency areas? In this paper, I compare the behavior of these variables in two countries, Mexico and the United States of America (USA), along with the member countries of the Euro Zone (European Monetary Union, or EMU). The main purpose is to know the divergence between public debt, average inflation ﹣0% in the graphs—in the main cities or regions of the first two, and compare them with the countries of the EMU. The period of 2001-2012 is chosen to be the years in which the Euro has been circulating among member countries of the Monetary Union (EMU). We find significant differences that allow us to determine the faults that the criteria of divergence on these variables had on the founding treaty of the European Monetary Union.

Keywords

Currency Areas; Optimal Currency Areas; Nonoptimal Currency Areas; Public Debt; Inflation; Unemployment

Conflicts of Interest

The authors declare no conflicts of interest.

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