Why the world should love the euro: The welfare implications of EMU for third countries

This paper studies the welfare consequences of the monetary union in Europe. It develops a monetary game which stresses the importance of international spillovers and the internalisation of externalities as a result of EMU. It is shown that in the context of this framework the EMU has a positive welfare impact on the rest of the world, even though the welfare impact of EMU on European countries themselves is ambiguous.