Summer Research Projects

Does Canada Constitute an Optimal Currency Area? Ryan MacLeod

Since the inception of the Eurozone, it is only natural that many economists have played with the idea that Canada and the United States should form a similar monetary union. This research project is intended to investigate the exact opposite possibility for Canadians, that is, should Canada itself have more than one currency?
The argument essentially boils down to whether or not the various economic regions of Canada collectively constitute what is known as an optimal currency area. To answer this question, I will consider two arguably distinct economic regions: Ontario – the largest provincial economy and the nation’s manufacturing capital – and Alberta – a province rich with oil wealth that has been booming in recent years. If these two regions are found not to meet the conditions for forming an optimal currency area then an argument can be made in favour of multiple currencies in Canada.