EU Monetary Research Articles

Avrupa Birliği ve ekonomik parasal birlikten ayrılmanın Lizbon Antlaşması çerçevesinde değerlendirilmesi

There has been two major developments today showing that withdrawal and expulsion from the European Union EU and Economic and Monetary Union EMU is being more seriously elaborated on in EU official circles. First one of these developments is the withdrawal right from the EU which has become a part of the Acquis Communautaire with the new Lisbon Treaty; the second development is EMU facing a serious economic crisis due to a possible Greek default on its sovereign debt after being hit by the 2008 global financial crisis. According to the withdrawal right outlined in article 50 of the Consolidated version of the Lisbon Treaty it is possible that potential bizzare and different scenarios are possible. The first scenario implies that a member state decided to withdraw from the EU, might opt for an agreement where it prefers to stay at least for a while in the EMU. Hereby it seems feasible that a withdrawing state from the EU can theoretically continue to use euro. The second scenario implies that according to a agreement in line with the Treaty, a member state can withdraw from EMU and continue to be a part of the EU under current legal regulations. Within this context, Lisbon Treaty has clarified inadequately the opinion of the EU officials on a member state withdrawing from the EU and has remained obscure on withdrawal from the EMU. According to the legal analysis carried out in this paper, article 50 of the Consolidated version of the Lisbon Treaty suggests that a member state is able to prefer to stay in the EMU, while it withdraws from the EU and also it suggests that it is possible to opt for a witdrawal from the EMU and continue to be a member of the EU. One of the conclusions of the paper is that a more clear strategy for withdrawal and expulsion might be beneficial for the EU integration process if used conveniently. In the end, even if the Lisbon Treaty makes such scenarios legally feasible, at least for now, it is considered that this kind of agreements are not realistic and negotiable in terms of EU politics

EU enlargement and monetary regimes from the insurance model perspective

It is widely observed and recognised that economic behaviour in the post-communist countries changed after these countries joined the European Union. The insurance model of currency crises proposed by Dooley, after being modified and interpreted within a broader conceptual meaning, provides good possibilities for analysing the whole process of post-communist transformation and EU accession. This article offers an empirical illustration of the theoretical model using the examples of Bulgaria and Romania. These two Balkan countries, the latest members of the EU (since 2007), have radically different monetary regimes – respectively a currency board and inflation targeting.

European and Asian monetary issues

In recent years, there has been considerable scholarly and policy community attention accorded to comparisons between the EU's monetary integration and attempts to create monetary integration in East Asia. This article examines these attempts in comparative perspective, focusing in particular on the challenges of monetary integration in Asia. After explaining recent development of financial and monetary cooperation initiatives in East Asia, such as Post-Chiang Mai Initiative and the attempt to introduce a Regional Currency Unit (RCU), this article illustrates why it is preferable for East Asia, in its attempt to pursue monetary integration, to follow a path similar to the European experience, rather than to follow alternative paths such as a parallel currency approach or a harmonized inflation targeting. That RCU could in the future be issued by the so-called ‘Asian Exchange Rate Stabilization Fund’ (AERSF). The AERSF would assure the stability of regional currencies taken as a whole vis-a-vis third currencies, and between themselves as well, and as such, pave the way for full monetary integration in Asia. Comparisons with Europe are explored and implications for European and Asian regionalism are examined.

EU Enlargement and Monetary Regimes from the Insurance Model Perspectives

Some ten years ago, Michael Dooley (Dooley, 1997; Dooley, 2000) put forward an insurance model of currency crises, which after some modifications gives a good theoretical basis for explanation of the overall dynamics of the post communist transformation and diversity across countries and periods. The article analyses, within the framework of the insurance model, the role of monetary regimes (currency anchor) and EU enlargement (political and geostrategic anchor) and their relationships.The insurance game model not only contains an explanatory power, but it also has the potential to suggest a range of measures that could be useful in overcoming the bad dynamics, which we are witnessing today not only in the new member-states, but also EU-wide.

Post-euro EU and US interest rates and foreign exchange rates: Are they in harmony or in disarray?

This paper focuses on: (1) how a select set of financial and economic factors could set the path for interest rates and foreign exchange rates, and (2) whether the resultant realized interest and exchange rates would be in harmony or in disarray. Using post-euro data for the EU and the US, an array of monetary rules is examined. In particular, the paper investigates whether the original and the extended Taylor rules provide an explanation of the dynamics of the EU monetary system since the inception of the euro. Our findings indicate that the EU and the US monetary responses are not the same and that exchange rates play a significant role.

The effects of EU shocks on the newly acceded countries

AbstractThis paper analyses the response of seven of the newly acceded countries (NACs) to EU supply and monetary shocks. A typical NAC perceives an EU technology disturbance as a negative supply shock and an EU monetary expansion as a negative demand shock. When we split the seven countries into two groups, results for group 1 which includes the Czech Republic, Hungary, Poland and Slovakia suggest that an EU supply shock feeds through as a demand shock, increasing both prices and output. This suggests trade acts as a channel of EU shock propagation. Monetary disturbances explain 2% and 3% of the output fluctuation of group one and two and 10% and 42% of interest rate variations, respectively. EU shocks are identified as given by Canova and De Nicoló (2002) using sign restrictions of the cross‐correlation function of the variables' responses to orthogonal disturbances. These restrictions are derived from a DSGE model. Copyright © 2007 John Wiley & Sons, Ltd.

A Market Friendly Approach to the Construction of a Northeast Asian Economic Hub

Arrangements for regional economic integration, under the WTO system, have unexpectedly dominated globalization. In fact, countries that have realized economic arrangements, such as the EU 's monetary union, are further expanding their efforts to achieve political integration. Regional economic integration is now considered an exigency of national affairs. North East Asian countries are also affected by this global predicament, but the issue involves greater structural complexities in this region. The emergence of China has forced Japan and Korea to contemplate difficult structural adjustments. For example, while the Korean government recognizes the importance of stronger intra-regional economic cooperation, by pursuing these arrangements it simultaneously faces the dilemma of maintaining traditional partnerships, such as those with the USA and Japan. If Korea actively supports regional economic arrangements, this action would be perceived as a bias toward China, consequently damaging ties with the US. Thus, rather than depending on public initiatives to establish economic ties in North East Asia, China, Japan and Korea should rely on market friendly projects initiated by the private sector that endorse gradual integration through non-political activities and exchanges among the citizens of the respective countries. This paper first proposes the founding of a North East Asian United University Community composed of students, professors and campuses of the three countries in the initial stages. Secondly, it proposes the development of unique Asian commodities, a concept similar to that of 'Airbus. ' Finally, it proposes utilization of retired Japanese, Korean and Chinese engineers and technicians to speed up the overall level of technology, which is critical to overcoming backwardness in this region.

Economics of European integration

Part 1: History, Facts and Institutions 1. History 2. Facts, Law, Institutions and Budget 3. Decision Making Part II: The Microeconomics of Economic Integration 4. Essential Microeconomics Tools 5. The Essential Economics of Preferential Liberalization 6. Market Size and Scale Effects 7. Growth Effects and Factor Market Integration 8. Economic Integrations, Labour Markets and Migration Part III: EU Micro Policies 9. The Common Agricultural Policy 10. Location Effects, Economic Geography and Regional Policy 11. EU Competition and State Aid Policy 12. EU Trade Policy Part IV: The Macroeconomics of Monetary Integration 13. Essential Macroeconomic Tools 14. Essential Facts of Monetary Integration 15. Optimum Currency Areas Part V: EU Monetary and Fiscal Policies 16. The European Monetary Union 17. Fiscal Policy and the Stability Pact 18. The Financial Markets and the Euro 19. The Eurozone in crisis

L'euro, facteur de recomposition du système monétaire international ?

The Euro, while fully playing its role as a stabilizer, has been disappointing so far due to its enduring weakness against the dollar. This can be explained in part by the fact that the dollar is the currency of a political entity, which thus has all the necessary legitimacy to pursue its economic policy through monetary means, whereas the mandate of the European Central Bank is of a purely technical nature. The EU monetary policy is not an economic policy. It remains framed by restrictive rules instead of guiding principles. Companies, few of which export on a regular basis in any case, do not consider the arrival of the euro as an event likely to change their strategies, except for certain trailblazers. And even less is known about the way in which the everyday user of the physical euro, in circulation beginning January 2002, will perceive the change. The fact nevertheless remains that the monetary union is a great achievement in the building of Europe and is considered a real model in many areas of the world, in particular Southeast Asia

The Euro Bloc, the Dollar Bloc and the Yen Bloc: How Much Monetary Policy Independence Can Exchange Rate Flexibility Buy in an Interdependent World?

The paper analyses the trade-off between exchange rate flexibility and monetary policy autonomy. It tests empirically the Possible Duality hypothesis, i.e. whether countries with more flexible currency regimes are indeed able to exert more monetary policy autonomy than those with less flexible ones, and whether moving towards exchange rate flexibility allows countries to gain monetary independence. The results for a set of open emerging markets and ERM countries show no systematic link between exchange rate flexibility and monetary independence. It is also found that the Fed is still the dominant force in world capital markets, although the importance of EU monetary policy decisions has been increasing and a Euro bloc has formed in Europe.

Europeans and their money: Explaining public support for the common European currency

Abstract. Using public opinion surveys conducted in the member states of the European Union, this paper seeks to provide a systematic understanding of public support for the EMU project and European–level monetary policy authority. We develop models of support for EU monetary policy that incorporate a utilitarian component and elements of multilevel governance that is emerging within the EU. These models are tested at the aggregate level of survey respondents. The results show that variations in attitudes to the common currency are driven by collectively–based considerations of the costs and benefits associated with the common currency project as well as the interaction of European–level politics and the domestic politics of the member states.

EU Labour Markets and Monetary Union

How can European labour markets cope with a single currency? The single currency success story is the US, which has maintained low unemployment rates both in the country as a whole and in individual regions. But Richard Jackman and Savvas Savouri argue this has been achieved by massive migration of workers from depressed to prosperous areas. In Europe migration within countries is quite low and between countries essentially non‐existent. Thus in Europe, unlike in the US, the adjustment to national or regional labour market shocks will depend on wage flexibility. Unhappily wages in Europe are not very flexible, particularly in conditions of low inflation, and the single currency may make them even less so. The prospect for depressed areas is thus bleak.

One Divisia money for Europe?

In 1992 the EU monetary authorities adopted a ‘harmonized’ broad money aggregate. The EMI was subsequently established to promote monetary policy coordination. This paper considers how broad money aggregates might be used to guide EU monetary policy and whether a ‘Euro-Divisia’ monetary index might provide a better guide than a ‘Euro-simple-sum’ aggregate. Our findings are based on data from the UK, France and Germany. They indicate that ‘Euromoney’ Granger-causes ‘Europrices’ and that the EuroDivisia monetary index is a better leading indicator of ‘Euroinflation’ than the Euro-simple-sum monetary aggregate.

Results of the First Stage of the EU Economic and Monetary Union

Results of the First Stage of the EU Economic and Monetary Union