Divided Opinion, Common Currency: The Political-Economy of Public Support for EMU

Implications of EMU enlargement for European monetary policy: A political economy view

In this paper we investigate the implications of EMU enlargement from a political economy perspective. We argue that a high degree of convergence of the candidate countries prior to EMU accession is an important requisite. Otherwise, as a result of a sharp increase in economic dispersion, public support for European monetary policy is likely to decrease, and external pressure on the European Ce...

One Currency for all the Europes? Relative Advantage and Political Economy Problems of EMU Enlargement

Europe's Gamble

AFTER THREE DECADES, the quest for European monetary unification may well bear fruit on January 1, 1999. On that date the European Union (EU) plans to introduce a common currency, the euro, in member states that satisfy specified macroeconomic convergence criteria. If the Economic and Monetary Union (EMU) project is launched on time and with the maximum membership of eleven countries that curre...

Currency Unions and Trade: How Large is the Treatment Effect?∗

It has been conspicuously hard to empirically identify clear-cut effects of Þxed exchange rates and other monetary regimes on the real economy. This paucity of empirical Þndings has lead many academic economists as well as other observers to the view that radical monetary reform — such as the adoption of a common currency — might have limited economic consequences. For example, it probably expl...

Estimated Stabilization Costs of the EMU

A multicountry econometric model and stochastic simulation are used to estimate the stabilizntion costs of the European Monetary Union (EMU). A measure of the variability of output and other variables is computed for the wnent regime and for the EMU reeime. The results show that Germanv is hurt the most in terms of increased output variability in moving from the current regime to the EMU regime...