Incluye bibliografía

This papers views developments in open-economy macroeconomics in light of the debate over the European monetary unification. The empirical tendency for nominal exchange rate regimes on the variability of nominal and real exchange rates alike can be rationalized by sticky-price theories or models of asset-market liquidity effects. But plausible liquidity models have difficulty generating enough persistence to match the data. Thus, the macroeconomic stabilization costs of forgoing the exchange-rate realignment option seem pertinent. It is argued that our theories of efficiencies due to a common currency remain unsatisfactory, despite recent advances. The paper concludes by reviewing theories of currency crisis.