Economic monetary aggregates and common currency areas: The case of Scandinavia

Please cite the paper as:
James L. Swofford, (2018), Economic monetary aggregates and common currency areas: The case of Scandinavia, World Economics Association (WEA) Conferences, No. 1 2018, Monetary Policy after the Global Crisis, 19th February to 20th April, 2018


Barnett (1980) described how to identify and construct monetary aggregate consistent with economic theory. Swofford (2000) extended Barnett’s work to the subject of common currency areas.

When the euro bloc was formed, among the European Union members not to join were Denmark and Sweden. These two countries did not join the euro bloc after “no” votes in referendums in each country. Perhaps the people of these countries felt the euro bloc was too large a step.

In this paper results are presented from revealed preference tests of microeconomic foundations of a Scandinavian common currency area. These results can be viewed as broadly favorable toward the formation of a Scandinavian common currency area.

Recent comments



  • monetarypolicyconferenceadmin says:

    Excellent paper! Hope that you are planning to expand the discussion about Scandinavia and to offer more insights about those countries.

  • Ryan Mattson says:

    Jim, I have some off topic comments, so thanks for your patience.

    Since the UK voted on Brexit, do you think these tests would favor some other common currency area for them?

    Have you considered this approach for cryptocurrencies? The data might be a pain to get though.

    • Jim Swofford says:

      Ryan, 1. The UK never went into the euro zone. To me an interesting issue is Scotland quitting the pound and joining the euro a feasible option for them? Similar to this paper, would an UK-Ireland common currency area work better for Ireland than the euro, but I suspect historical issues with each other make that a political non-starter. 2. I have not yet looked at cryptocurrencies. You are right the data is probably quite difficult to get at. Plus the issue is who holds them, not the people in a single currency area. We ignore a similar thing with the US by pretending the US is the US dollar area in all of our studies when other like Liberia and Panama use the US dollar also. This is probably ok for the US as it is large compared to other economies using the US dollar and the same probably holds for cryptocurrencies for now.