Contributors: Fritzsche (Rauch), Carolin (Ifo Institut)
Studied Business Administration and Economics in Dresden and France. Joined the University of St Andrews and gained an MSc in International Finance and Economics. Currently PhD student at the ifo Institute for Economic Research, main focus on public finance and economic development.
Scientific paper contribution: The Advantages of a Community Currency – An OCA Perspective
Abstract: There is an ongoing debate about the advantages and disadvantages of community currencies in the literature. Proponents of a local currency outline the economic, social and ecological benefits. However, empirical studies find mainly social networking effects and almost no economic influence. It seems that the economic advantage of community currencies does not prevail (at least at first). This paper explores why this is the case and how this situation could be changed. Even when taking into account that the true value of the alternative payment system lies beyond its economic benefit, it would still be desirable to deliver on the promises made when introducing it. The Optimum Currency Area (OCA) Theory allows for even more economic advantages given that a region is not an OCA and therefore should introduce its own currency. In order to illustrate these interrelations, the example of Saxony in Germany is explored.