Alberto Alesina

Currency Unions reviews the traditional case for flexible exchange rates and "countercyclical"-that is, expansionary during recessions and contractionary in booms-monetary policy, and shows how flexible exchange rate regimes can better insulate the economy from such real disturbances as terms-of-trade shocks. The book also looks at the pitfalls of flexible exchange rates-and why fixed rates, particularly full dollarization-might be a more sensible...