An Empirical Analysis of Endogenous Optimal Currency Area Theory Using a Gravity Model

The startup of Euro makes optimal currency area theory cannot be immersed in discussions of "beforehand" standards, otherwise to change to the research of "afterwards" effects of currency union\´s. It is found that "beforehand" standards provided by original optimal currency area theory can be convergent gradually after the setting up of currency union after the research about effects of currency union, which is called optimal currency area\´s "endogenous". Based on Mundell\´s optimal currency area theory, this paper using a gravity model evaluate the effects of convergent standards in Maastricht Treaty to endogenous optimal currency area of EU, through selecting a panel date from 14 countries of EU. The results show: interests, finance policies, convergence of debts are important to the effects of endogenous optimal currency of EU