Lama, Ruy; Rabanal, Pau - In: European Economic Review 72 (2014) C, pp. 138-165
This paper evaluates the role of trade and financial linkages in the decision to enter a monetary union. We estimate a two-country DSGE model for the U.K. economy and the euro area with financial intermediaries as in Gertler and Karadi (2011). We use the model to compute the welfare trade-offs...