two concepts of money by charles a.e. goodhart
DESCRIPTION
Much of the economic analysis of moving to EMU has been undertaken within the context of the Optimal Currency Area paradigm. This spatial/geographic counterpart of the currently dominating model of the nature and evolution of money, here termed M theory, whereby money is viewed as having developed from a private sector cost minimisation process to facilitate trading. Here, I argue, first, that there is a second, cartalist, or C theory alternative, which is empirically more compelling. Second, I claim that this approach can predict observed relationships between sovereign countries and their currencies better than the OCA model.TRANSCRIPT
