The Sustainability of Monetary Unions. Can the Euro Survive? Abstract:This paper aims to propose a new measure of exchange marke
				Canofari PaoloMarini  GiancarloPiersanti  Giovanni			
		
				CEIS Research Paper
		
				This paper aims to propose a new measure of exchange market pressure for countries operating in hard peg regimes, such as currency unions, currency boards or full dollarization. We use a general model of currency crisis to derive a sustainability index based upon the relationship between the shadow exchange rate and the output gap required to maintain the currency peg. We apply the new index to European Union countries in order to assess the sustainability of the Euro.
		
				
		
	Number: 226
		
				Keywords: shadow exchange rate, currency crisis, exchange market pressure
		
				JEL codes: F3;F31;F41;G01
		
		
		
				Date: Tuesday, March 27, 2012
		
				Revision Date: Tuesday, March 27, 2012