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Monetary Union (monetary + union)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	71%
Humanities and Social Sciences	28%

Kinds of Monetary Union

european monetary union

Selected Abstracts

UNCERTAINTY AND WAGE SETTING IN A MONETARY UNION,

THE MANCHESTER SCHOOL, Issue 4 2008
CARSTEN HEFEKER
The enlargement of the European Monetary Union is likely to lead to an increase of uncertainty about the transmission of monetary policy for the larger union. Adding new members to the central bank council in addition implies that the policy reaction of the enlarged council will be uncertain for an initial period. The paper considers the influence of both types of uncertainty on wage setting and unemployment in the larger monetary union. [source]

COORDINATION OF MONETARY AND FISCAL POLICY IN A MONETARY UNION: POLICY ISSUES AND ANALYTICAL MODELS

THE MANCHESTER SCHOOL, Issue 2007
Article first published online: 9 AUG 200, MATTHEW B. CANZONERI
The European Monetary Union raises new and interesting questions about the coordination of monetary and fiscal policy. In this lecture, I discuss some of these questions and the answers that a new class of models,new neoclassical synthesis (NNS) models,is currently giving to them. I will argue that the new questions expose some weaknesses in current NNS modeling; in particular, the models do not seem to explain the positive correlation between national inflation and growth differentials that has been observed in the European data. I also review some recent work that has been done on policy coordination within a currency union. [source]

Does Italy's plight threaten European Monetary Union?

ECONOMIC OUTLOOK, Issue 3 2005
Article first published online: 27 JUL 200
The Italian economy is in a mess. GDP is expected to contract by 0.6% this year and the budget deficit is heading towards 4% of GDP , it is hard to see a way out of the mire. And after the rejection of the European constitution in France and the Netherlands, questions are being asked about the very future of the European project. With Italy fundamentally uncompetitive across a whole range of both price and non-prices measures, and with an industrial structure ill-equipped to deal with the challenges of globalisation, Italy's long-term membership of the Euro is being debated. This article by Keith Church sets out Italy's problems and argues that, if the economy stagnates for a prolonged period, pressure to leave EMU will become irresistible. This can be avoided if the government finally implements structural reforms instead of continually ,muddling through'. At the same time, the ECB needs to realise the urgency of the current situation and start to show greater flexibility. [source]

Sterling and the Euro

ECONOMIC OUTLOOK, Issue 1 2000
Erik Britton
The question of whether and when sterling should join Economic and Monetary Union is likely to be one of the key battlegrounds in the next election campaign. In this article, Erik Britton and Scott Livermore argue that there is no clear economic case in favour of sterling's entry to EMU. However, if as the government asserts , the political will to join exists, steps could be taken now, adjusting the mix of macroeconomic policy, to ensure that convergence was likely shortly after the next election. [source]

European Monetary Union: the dark sides of a major success

ECONOMIC POLICY, Issue 46 2006
Charles Wyplosz
SUMMARY European monetary union THE DARK SIDES OF A MAJOR SUCCESS This paper revisits the debates that have surrounded the launch of a unique experience: the adoption of a common currency among developed countries. A striking aspect of this history is that, pressed by what they correctly identified as a window of opportunity, policy-makers crafted this complex project in a short period of time, largely eschewing inputs from the academic profession. Academic research, in turn, developed its own views, which turned out to be critical of some ley orientations, yet it generally recognizes that, in the end, the launch of the euro has been a major success. Over time, many of the academic criticisms have been taken on board, but not yet fully. The monetary strategy has been slightly amended, but it remains the subject of disagreements between the European Central Bank and monetary economists. Events have confirmed that the Stability and Growth Pact was ill-designed; its reformulation goes some way to address some of the concerns but not all of them. Its ability to deliver fiscal discipline is in doubt. Another look at the experiment highlights the gap between the principles laid out by those who designed the monetary union and the pragmatism that has prevailed thereafter. The resulting tension between principles and actions sometimes obscures the fact that the Eurosystem has acted wisely so far. The widespread perception that monetary policy is not as transparent as it should be and suffers from a lack of adequate democratic accountability is not just annoying. The general public, including politicians, sometimes blames the Eurosystem for Europe's poor growth performance since the adoption of the euro. This is unfair and could dangerously undermine the monetary union if the Eurosystem were to become the scapegoat for the slow and incomplete reforms that are needed to revigorate the euro area's economies. , Charles Wyplosz [source]

Business Cycles under Monetary Union: A Comparison of the EU and US

ECONOMICA, Issue 267 2000
Mark A. Wynne
This paper documents business cycle similarities and differences among the12 Federal Reserve districts in the USA and the 15 countries that make upthe EU. The comparison is suggestive of what might be expected to emerge inthe way of business cycle synchronization from a monetary union between themember states of the EU. [source]

Financial Integration and EMU

EUROPEAN FINANCIAL MANAGEMENT, Issue 1 2005
Franklin Allen
G21; G34; F23 Abstract This paper investigates the effect of European Monetary Union on the integration of the financial services industry within European using data on the announcements of M&A's within the industry. We find some evidence that EMU has helped financial integration within the euro area. In addition, financial institutions in EMU countries became more active in initiating integration between EMU and non-EMU partners, which also contributed to overall regional integration within European. The more active role of EMU institutions suggests that institutions residing in the eurozone became stronger players in the corporate control market. However, EMU does not facilitate the entry of non-European institutions into European. [source]

Governmental Accounting in Spain and the European Monetary Union: A Critical Perspective

FINANCIAL ACCOUNTABILITY & MANAGEMENT, Issue 2 2000
Vicente Montesinos
During the last twenty-five years, the changes in Spanish accounting have been radical and significant, especially since 1986 when Spain joined the European Union. Those changes were first introduced in business accounting, following the patterns of the Fourth Directive, but governmental accounting has also been affected by structural reforms that have modified the financial reporting system, the accounting standards and the accounting principles to be applied. However, the governmental accounting system needs further improvement, particularly given the EMU framework and the relationship between governmental accounting and national accounting. [source]

Interest Rate Volatility Prior to Monetary Union under Alternative Pre-Switch Regimes

GERMAN ECONOMIC REVIEW, Issue 4 2003
Bernd Wilfling
Interest rate volatility; term structure; exchange rate arrangements; intervention policy; stochastic processes Abstract. The volatility of interest rates is relevant for many financial applications. Under realistic assumptions the term structure of interest rate differentials provides an important predictor of the term structure of interest rates. This paper derives the term structure of differentials in a situation in which two open economies plan to enter a monetary union in the future. Two systems of floating exchange rates prior to the union are considered, namely a free-float and a managed-float regime. The volatility processes of arbitrary-term differentials under the respective pre-switch arrangements are compared. The paper elaborates the singularity of extremely short-term (i.e. instantaneous) interest rates under extensive leaning-against-the-wind interventions and discusses policy issues. [source]

Catching-up of East German Labour Productivity in the 1990s

GERMAN ECONOMIC REVIEW, Issue 3 2000
Ray Barrell
We provide empirical evidence for exogenous and endogenous catching-up of East German labour productivity to West German levels. We argue that labour productivity in East Germany has caught up faster than has happened elsewhere. The sudden formation of the German Monetary Union was followed by large transfers to East Germany, migration of workers to West Germany, reorganization and privatization of East German firms. This has quickly led to a partial closing of the organizational, idea and object gaps that existed between East and West Germany. This paper analyses labour productivity in East and West Germany using both aggregate German data and unbalanced panel analysis of developments in East and West Germany. Factors affecting the organization of production, and especially privatization and ,foreign' firms, are found to be particularly important in this context. [source]

Britain, EMU and the European economy

INDUSTRIAL RELATIONS JOURNAL, Issue 4 2000
Steve Bradley
In January 1999, 11 member countries of the European Union ,irrevocably' locked the foreign exchange values of their currencies to the euro, and they committed themselves to abandon their currencies in favour of the euro in 2002. As a result, these countries ceased to operate independent monetary policies. Monetary policy for the whole euro-zone became the responsibility of the European Central Bank (ECB), whose primary objective is to maintain a low and stable rate of price inflation for the euro currency. The rules governing Economic and Monetary Union (EMU) were laid down in the treaty of Maastricht in 1992. As conditions for entry to EMU, the treaty specified ,convergence criteria' which consisted of upper limits for several macroeconomic aggregates including, notably, a 3 per cent maximum for the ratio of the public sector deficit to GDP and 60 per cent for the ratio of public debt to GDP.1 In February 1998 the 11 applicant countries submitted statistical analyses relating to their satisfaction of these conditions. Despite doubts as to whether some of them had strictly met the conditions, the European Commission deemed them all eligible, and the euro was launched.2 The British government, though more clearly eligible than most other EU countries on the basis of the convergence criteria, decided to defer its decision on entry. In this paper we consider the arguments for and against Economic and Monetary Union, and in particular whether it would be in Britain's interest to join. We begin with a brief review of the state of the European economy and an analysis of the first year performance of the new Euro currency. [source]

Reflections on the optimal currency area (OCA) criteria in the light of EMU

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 4 2003
M.J. Artis
Abstract Optimal Currency Area (OCA) theory offers criteria for evaluating the optimality of monetary union arrangements. This paper reviews the use that has been made of these criteria in the specific context of European Monetary Union. It reviews the use of business cycle synchronization data and the data produced by SVAR analyses, which led to the ,core,periphery' distinction. It also reviews extensions of the criteria that have been proposed or generated in this context: in particular, the proposition that the criteria may be ,endogenous'. It presents Taylor rule estimates to check for inhomogeneities in Euro Area performance. The paper concludes that OCA criteria provide a useful starting point for evaluating monetary union options. Copyright © 2003 John Wiley & Sons, Ltd. [source]

Explaining Europe's Monetary Union: A Survey of the Literature

INTERNATIONAL STUDIES REVIEW, Issue 2 2009
Tal Sadeh
This article offers a survey of the literature on European Economic and Monetary Union (EMU), in particular works that deal with the question why EMU happened and, based on this literature, what one might be able to conclude about its sustainability. It reviews the literature by dividing up the analyses into four categories: those that explain EMU at the global and at the European Union (EU) levels of analysis, explanations at the national level, and explanations at the domestic level of analysis. The review suggests that EMU was a particular European response to global developments, which was possible because of existing EU institutions. EMU was causally motivated by a Franco-German deal, balancing national interests. Domestic motives reflect essentially opportunistic motives, and thus, cannot explain EMU. In our judgment the review suggests that Europe's single currency will remain sustainable as long as the Franco-German political deal sticks, the belief in the "sound money" idea remains hegemonic in Europe, and the losers from EMU are underrepresented in national and EU institutions. While opportunistic domestic motives cannot explain embarking on a long-term project, they can definitely be sufficient to derail such a project. [source]

A small monetary system for the euro area based on German data

JOURNAL OF APPLIED ECONOMETRICS, Issue 6 2006
Ralf Brüggemann
Previous euro area money demand studies have used aggregated national time series data from the countries participating in the European Monetary Union (EMU). However, aggregation may be problematic because macroeconomic convergence processes have taken place in the countries of interest. Therefore, in this study, quarterly German data until 1998 are combined with data from the euro area from 1999 until 2002 and these series are used for fitting a small vector error correction model for the monetary sector of the EMU. A stable long-run money demand relation is found for the full sample period. Moreover, impulse responses do not change much when the sample period is extended by the EMU period provided the break in the extended data series is captured by a simple dummy variable. Copyright © 2006 John Wiley & Sons, Ltd. [source]

Dependent and Accountable: Evidence from the Modern Theory of Central Banking

JOURNAL OF ECONOMIC SURVEYS, Issue 5 2000
Gustavo Piga
In this paper we take another look at the literature on central bank independence. We show that the representative-agent approach to monetary policy is seriously flawed and does not provide a sound basis for deriving institutional solutions to the inflationary-bias. We then argue that the political approach to monetary policy provides a better account of the inflationary-bias and that this has important implications for the set-up of institutional arrangements, like central-bank independence, and the role of contractual arrangements, like indexation. Central bank independence, if appropriately modeled, can fail to reduce inflationary pressures in plausible circumstances. We then identify some issues in the theory of central banking that have not been clearly resolved and we offer some intuition as to the way they could be studied. We conclude by showing some potentially worrisome implications for the future of the European Monetary Union. [source]

BBVA-ARIES: a forecasting and simulation model for EMU

JOURNAL OF FORECASTING, Issue 5 2003
Fernando C. Ballabriga
Abstract This paper describes the BBVA-ARIES, a Bayesian vector autoregression (BVAR) for the European Economic and Monetary Union (EMU). In addition to providing EMU-wide growth and inflation forecasts, the model provides an assessment of the interactions between key EMU macroeconomic variables and external ones, such as world GDP or commodity prices. A comparison of the forecasts generated by the model and those of private analysts and public institutions reveals a very positive balance in favour of the model. For their part, the simulations allow us to assess the potential macroeconomic effects of macroeconomic developments in the EMU.,Copyright © 2003 John Wiley & Sons, Ltd. [source]

Time Inconsistency and Free-Riding in a Monetary Union

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 7 2008
VARADARAJAN V. CHARI
monetary regime; fixed exchange rates; dollarization; European Union; Maastricht Treaty In monetary unions, a time inconsistency problem in monetary policy leads to a novel type of free-rider problem in the setting of non-monetary policies. The free-rider problem leads union members to pursue lax non-monetary policies that induce the monetary authority to generate high inflation. Free-riding can be mitigated by imposing constraints on non-monetary policies. Without a time inconsistency problem, the union has no free-rider problem; then constraints on non-monetary policies are unnecessary and possibly harmful. This theory is here detailed and applied to several non-monetary policies: labor market policy, fiscal policy, and bank regulation. [source]

Interest group strategies in multi-level Europe

JOURNAL OF PUBLIC AFFAIRS, Issue 1 2007
John Constantelos
This article analyzes the political responses of French and Italian business associations to Economic and Monetary Union (EMU) in the EU. I propose and test the empirical relevance of a multi-level lobbying model for multi-tiered systems, a model assumed by, but never systematically examined in, the pluralism literature. Data for this ten-sector cross-national panel study come from personal interviews with the presidents of French and Italian business associations. The interviews were held at the beginning and the end of the euro implementation process. The research shows that organized groups routinely overstep their territorial jurisdictions to lobby across multiple levels of government in multi-level Europe. The degree of state political decentralization is a statistically significant variable in explaining the choice of lobbying target. This ,crucial comparative case study' finds that, in adjusting to deeper economic integration, regional associations in France focus their energy on the central government, while Italian groups favour the regional government. Copyright © 2007 John Wiley & Sons, Ltd. [source]

Nominal Wage Flexibility, Wage Indexation and Monetary Union,

THE ECONOMIC JOURNAL, Issue 508 2006
Lars Calmfors
Membership in a monetary union implies stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than non-membership. This counteracts the stabilisation policy cost of giving up monetary independence. But more wage flexibility is only an imperfect substitute for an individual monetary policy. It is possible that an increase in wage flexibility is welfare-decreasing because of the accompanying rise in price variability. The interaction between wage setting and central bank behaviour may result in either multiple equilibria or a unique full-indexation equilibrium. [source]

Inflation in a Monetary Union.

THE ECONOMIC JOURNAL, Issue 491 2003
Valeria de Bonis
No abstract is available for this article. [source]

UNCERTAINTY AND WAGE SETTING IN A MONETARY UNION,

BANK COMPETITION, CONCENTRATION AND EFFICIENCY IN THE SINGLE EUROPEAN MARKET,

THE MANCHESTER SCHOOL, Issue 4 2006
BARBARA CASU
The deregulation of financial services in the European Union (EU), together with the establishment of the Economic and Monetary Union, aimed at the creation of a level playing-field in the provision of banking services across the EU. The plan was to remove entry barriers and to foster both competition and efficiency in national banking markets. However, one of the effects of the regulatory changes was to spur a trend towards consolidation, resulting in the recent wave of mergers and acquisitions. To investigate the impact of increased consolidation on the competitive conditions of the EU banking markets, we employ both structural (concentration ratios) and non-structural (Panzar,Rosse statistic) concentration measures. Using bank-level balance sheet data for the major EU banking markets, in a period following the introduction of the Single Banking Licence (1997,2003), this paper also investigates the factors that may influence the competitive conditions. Specifically, we control for differences in efficiency estimates, structural conditions and institutional characteristics. The results seem to suggest that the degree of concentration is not necessarily related to the degree of competition. We also find little evidence that more efficient banking systems are also more competitive. The relationship between competition and efficiency is not a straightforward one: increased competition has forced banks to become more efficient but increased efficiency does not seem to be fostering more competitive EU banking systems. [source]

The Functional Form Of The Demand For Euro Area M1

THE MANCHESTER SCHOOL, Issue 2 2003
Livio Stracca
A remarkable development seen in recent years is the pronounced decline in euro area M1 velocity vis,à,vis a moderate decline in short,term interest rates, which represent the most natural opportunity cost for M1, suggesting an increase in the interest rate elasticity of M1 demand. In fact, estimating a theoretically plausible and stable demand function for M1 in the euro area is possible if a functional form of money demand allowing for an interest rate elasticity decreasing in size with the level of the interest rate is imposed. This finding would apparently suggest that the decline in inflation and nominal interest rates in Europe experienced in the run,up to the euro should have ,naturally' brought about an increased degree of preference for liquidity without any fundamental change in agents' preferences. To test the validity of this conclusion, a time,varying parameters model is estimated through a Kalman filter on the level of real M1, which is able to test simultaneously the stability of the parameters and the functional form of the demand for euro area M1. In this case, results clearly suggest the double,log function to be very close to the true ,deep' functional form of M1 demand in the euro area, consistent with the findings of Chadha, Haldane and Janssen for the UK and of Lucas for the USA. At the same time, there is evidence of an increased interest rate elasticity in M1 demand in the most recent years, presumably associated with the transition to the new environment prevailing from the start of Stage Three of European Monetary Union. [source]

The Stability of Emu-wide Money Demand Functions and the Monetary Policy Strategy of the European Central Bank

THE MANCHESTER SCHOOL, Issue 2 2000
Annick Bruggeman
In this paper we investigate whether monetary aggregates could play a role as either intermediate targets or indicators of the single monetary policy of the European Central Bank (ECB). To this end we estimate money demand functions for the European Economic and Monetary Union and test for their stability. Our estimations suggest that M3H in particular can play a role in both a monetary and an inflation targeting strategy. If the ECB chooses to opt for an inflation targeting strategy MR and even M1, in addition to M3H, may well serve as important indicators, alongside a number of other financial and real variables. [source]

Co-Movement Towards a Currency or Monetary Union?

AUSTRALIAN ECONOMIC PAPERS, Issue 3 2001
An Empirical Study for New Zealand
This paper analyses whether New Zealand would be ready to form a currency or monetary union with either Australia, the 11 EU countries that are members of the EMU, Japan, or the US, if the criteria that have been used by researchers for the EMU are applied. The analysis is an empirical study with data from the mid 1980s to 1998, using cointegration techniques to search for co-movement and convergence in key economic variables: interest rates, inflation rates, exchange rates, real GDP, and current-account/GDP ratios. [source]

,Concentric Circles' at the Periphery of the European Union

AUSTRALIAN JOURNAL OF POLITICS AND HISTORY, Issue 3 2000
Karis Muller
After World War II when the governments of several European states attempted to form supranational groupings, colonial obligations posed problems that persist to this day. The article traces immediate postwar history, outlining the present relationship between the EC institutions and what remain of member-state Empires, before proceeding to two case studies. The first concerns the ramifications of ,Euroland' in present or past dependencies after European Monetary Union. The second considers the role of European dependencies in military alliances and analyses how one of the founding Treaties was used in the mid-1990s after the discovery that it applied extra-territorially. The conclusion is that the external border of multi-speed Europe is even more variable than it might otherwise be because of the attachments some member states retain to colonial remnants. [source]

Strategic Delegation in Monetary Unions

THE MANCHESTER SCHOOL, Issue 2004
V. V. Chari
In monetary unions, monetary policy is typically made by delegates of the member countries. This procedure raises the possibility of strategic delegation,that countries may choose the types of delegates to influence outcomes in their favor. We show that without commitment in monetary policy, strategic delegation arises if and only if three conditions are met: shocks affecting individual countries are not perfectly correlated, risk-sharing across countries is imperfect, and the Phillips curve is nonlinear. Moreover, inflation rates are inefficiently high. We argue that ways of solving the commitment problem, including the emphasis on price stability in the agreements constituting the European Union, are especially valuable when strategic delegation is a problem. [source]

Liberalized capital markets, state autonomy, and European monetary union

EUROPEAN JOURNAL OF POLITICAL RESEARCH, Issue 2 2003
Erik Jones
The conventional wisdom is that capital market integration and now monetary union have limited the options available to macroeconomic policy makers in Europe. The question considered here, therefore, is why many prominent Europeans insist that monetary union is a rational response to capital market integration. Monetary union eliminates exchange rate volatility , but only at a cost in terms of tightening the constraints on macroeconomic policy. Using a combination of macroeconomic theory and (descriptive) statistical analysis of European performance, I find that: capital market integration has increased macroeconomic flexibility through a mitigation of the current account constraint; European states have combined macroeconomic policies in a manner that has taken advantage of greater flexibility on the current account; the cost of such flexibility in terms of the impact of financial volatility on the real economy manifests differently in different countries; and monetary union both enhances flexibility on the current account and mitigates financial volatility. [source]

Gresham on horseback: the monetary roots of Spanish American political fragmentation in the nineteenth century1

ECONOMIC HISTORY REVIEW, Issue 3 2009
MARIA ALEJANDRA IRIGOIN
This article deals with the political economic consequences of the disappearance of the Spanish silver peso standard in Spanish America, the longest monetary union that ever existed. With the Napoleonic invasion of Spain in 1808, the fiscal and political structure of the empire imploded and most colonies became independent. Regional competition for revenues exacerbated budget shortfalls driven by military expenditure. Local elites established in former colonial Treasury districts started highly diverse monetary experiments to procure funds. Those in control of mint houses started minting their own coins or debased existing silver currency. Elsewhere, inconvertible paper currency was also created to meet budget deficits. As a result, the most valuable feature of the Spanish American silver peso, its quality standard, was broken and the standard that had organized the early modern international economy for more than 300 years ceased to exist altogether. In Spanish America, as diverse monies co-existed within a formerly highly integrated economic space, a widespread Gresham's law effect exacerbated the conflict among local and regional elites. This fostered the political fragmentation of colonial Spanish America into an increasing number of political and monetary sovereign entities during the nineteenth century. [source]