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The Economics of Common Currencies (Collected Works of Harry Johnson) by Alexander K. Swoboda, Harry G. Johnson

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Chapter 5

SOME EARLY VIEWS ON MONETARY INTEGRATION

THOMAS GUGGENHEIM

University of Geneva

I INTRODUCTION

The problem of international monetary integration can be approached from two different directions. On the one hand, it can be viewed from the standpoint of the adjustment process – i.e. by posing the question of the influence of international monetary flows on the economies of the countries concerned. If a universal currency existed, adjustment would have to take place by price movements within states. If price rigidities exist, it will take place through changes in real output and employment. This suggests that the domain of monetary integration should be an area in which factor mobility is great enough to guarantee painless adjustment.

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