This paper sets out the theoretical foundations for continuous-time signal extraction in econometrics. Continuous-time modeling gives an effective strategy for treating stock and flow data, irregularly spaced data, and changing frequency of observation. We rigorously derive the optimal...

Leaving EMU would create great legal uncertainty and costly litigation and would hence involve extremely high costs for a country that has fully been euronized. Nevertheless, it is conceivable that these costs are not high enough to eliminate fully the risk of monetary disintegration in Europe....