European Monetary Integration Research Articles

From Transition to Monetary Integration: Revenues from Seignorage in Poland

The analysis presented in the paper focuses on seigniorage revenues in the period of transition to market economy and fiscal consequences of European monetary integration. A comprehensive framework for a measurement of seigniorage revenues in transition eriod is presented and estimates of its sources and uses in the period 1990–2000 are computed and analyzed. The analysis reveals that in Poland at the end of the last decade revenues from the money creation have not been extensively used as a tool for financing government expenditures. Furthermore, it is shown that, in contrary to the transition period, an accession to European Monetary Union will be accompanied by significant fiscal gains resulting from redistribution of seigniorage wealth between member countries.

The Determinants of Cross-Border Bank Flows to Emerging Markets: New Empirical Evidence on the Spread of Financial Crises

This paper studies the nature of spillover effects in bank lending flows from advanced to the emerging market economies and identifies specific channels through which such effects occur. Based on a gravity model we examine a panel data set on cross-border bank flows from 17 advanced to 28 emerging market economies in Asia, Latin America and central and eastern Europe from 1993 to 2008. The empirical analysis suggests that global as well as country specific factors are significant determinants of cross-border bank flows. Greater global risk aversion and expected financial market volatility seem to have been the most important factors behind the decrease in cross-border bank flows during the crisis of 2007-08. The withdraw of cross-border loans from central and eastern Europe was more limited compared to Asia and Latin America, in large measure because of the higher degree of financial and monetary integration in Europe, and relatively sound banking systems in the region. These results are robust to various specification, sub-samples and econometric methodologies.

Monetary integration and the French model: a case study in the eurozone

Whatever its successes and difficulties, monetary integration has caused significant changes in many, perhaps most, Eurozone societies. A review of EMU's origins and first years of EMU would thus be remiss without national case studies. France is a particularly good choice for this task. It has had complicated, passionate relationships with European integration. It has often taken the lead, worked to make the architecture of Europe conform to its desires and protested about the constraints that this new Europe placed on its national life. And nowhere have these contradictory outlooks been as clear as in European monetary integration and EMU.

European monetary integration and persistance of real exchange rates

The aim of this paper is to analyze whether the persistence properties of the European real exchange rates changed when their currencies joined the euro or during the monetary integration process. More specifically, we investigate whether, as a result of the single currency or the previous macroeconomic stability, nominal price rigidities have decreased and the persistence of real exchange has fallen. We test for stationarity against a change in the integration order on different competitiveness measures during the period that runs from the middle of the seventies to nowadays. The results show that the real exchange rates of the European periphery (Spain, Italy, Portugal, Greece and Finland) underwent a change in their order of integration from I(1) to I(0) at some time around the middle of the 1990s. On the other hand, the real exchange rates of the Central European countries, with a greater stability in the 1980s and 1990s, changed their integration order earlier, if at all, mostly during the 1980s. So, the euro seems to have had, on the whole, little influence on the persistence of real exchange rates. Only for a few countries do our findings detect a significant decrease in persistence related with the nominal convergence process.

Alternative Routes to Monetary Integration in the British Economic and Political Debate (1989-91)

In 1989, the Delors Report pushed the accelerator on European economic and monetary integration, setting the calendar for a three-steps process aiming at a single currency. The British Government tried to hinder this goal, casting into the scientific debate and political negotiations alternative plans, first based on currency competition, later on the issuance of a parallel currency (the "hard-ecu" proposal). The aim of this work is to reconstruct the theoretical framework in which such debates took place in Britain, both at a scientific level and in the political arena

Des moyens de l’intégration monétaire européenne

European monetary integration policy nowadays centers on the search for a common money by opposition to a single monetary unit; but many problems remain as to the means of achieving this end. After reviewing the perennial discussions concerned with the foundations of this monetary integration (e.g. the problems of the optimum of a monetary area, where Mr. Bourguinat challenges the criteria based on differential factor mobility or on the relative degree of "openness"), the study analyses the narrowing of margins in the light of recent experience. Considering the events of 1972 and 1973 the narrowing of margins is a very difficult task; it means nothing less than creating for the E.E.C. members an island of stability in a world environment becoming evermore flexible. The freedom which has been lost on exchange rate fluctuations seems to have resulted in an increased instability of par values (e.g. the successive revaluations of the deutschmark, the florin, etc.). For the achievement of a truly common money the author suggests an alternative approach: it consists in issuing, side by side with national currencies, a unit called an Europa; serving initially as a unit of account, the Europa would gradually become a true means of payment.

Fiscal policy and monetary integration in Europe: an update

By distinguishing between discretionary and non-discretionary fiscal policy, this paper analyses the stability of fiscal rules for EMU countries before and after the Maastricht Treaty. Using both Instrumental Variables and GMM techniques, it turns out that discretionary fiscal policy remains procyclical after 1992. This result contradicts the previous findings of Gali and Perotti (2003) . It also appears that fiscal rules differ between large and small countries: especially large countries follow a procyclical discretionary policy. Furthermore, the paper shows that discretionary fiscal policy does exhibit different behaviour facing supply or demand constraints. The procyclical discretionary policy is followed mainly during upswings, when supply constraints are prevalent. Finally, there is no support for the presence of a ‘fatigue effect’ in fiscal discipline.

Monetary Integration in Europe (and beyond)

In this special issue of International Economics and Economic Policy, we have compiled seven papers which were given at the 9th Annual Conference of the International Network for Economic Research (INFER) in Loughborough, UK. These papers repesent only a small sample of papers, which were presented in Loughborough. However, they all fit into the special topic of that conference (Monetary Integration in Europe). Ten years after the introduction of the Euro there are still open issues, which are subject to ongoing research. In this special issue, we address some of them. We start with a paper by Hughes Hallett and Richter that looks into the transmission mechanism of monetary policy for the two most influential Eurozone economies, for the Eurozone as a whole and the UK as an outsider. They find that transmission mechanisms were significantly different to each other, but have converged since the introduction of the Euro. Adam Koronowski analyses divergent business cycles in the Euro area. Within his theoretical framework, the results of economic policy in a monetary union are suboptimal; the domestic product ends up below its potential level that the economy could attain at a flexible exchange rate and an individually set interest rate. This solution is an example of a Nash equilibrium, which is not Pareto optimal. It proves again that micro-optimization is not a substitute for a proper macroeconomic policy that should create the right conditions for decisions taken by individual agents. When representative agents differ among countries with respect to their intertemporal preferences macro-policies should be “customized”, one size does not fit all. Asymmetric shocks are not only important with respect to business cycles but also in terms of current account adjustments. If the Euro–Dollar exchange rate changes then that might have asymmetric implications for the Eurozone countries, which in turn has consequences for monetary policy in Europe. Langwasser analyses Int Econ Econ Policy (2009) 6:83–84 DOI 10.1007/s10368-009-0139-y

Monetary Integration in Europe – By H. Tomann

Monetary Integration in Europe – By H. Tomann

La justification économique de l’Union économique et monétaire : ex ante, ex post ou inexistante ?

The Economic Justification of European Monetary Integration : ex ante, ex post or not at all ? Did economic analysis justify ex ante the decision to create an European monetary union (EMU) and the way to create it ? By looking at the main theoretical contributions and at official European publications, we show that the answer is not so simple. First, economic analysis, in particular optimum currency area theory, was far from offering a complete justification of EMU. Furthermore, EMU also raises the issue of the conditions of coordination of national fiscal policies with the unique monetary policy. But the available analyses were not always relevant for the European experience. The second part shall show therefore that the historical justification of EMU and of the organisation of its policy mix rests rather on more pragmatic analyses, except for the choice of an independent central bank, justified in theory. Finally, the realisation of EMU has fostered theoretical developments in the realm of optimal currency area theory, now better able to explain the benefits of EMU, and of fiscal federalism.

From the Athenian tetradrachm to the euro: studies in European monetary integration - Edited by Philip L. Cottrell, Gérassimos Notaras, and Gabriel Tortella

The Economic History ReviewVolume 61, Issue 4 p. 1022-1024 From the Athenian tetradrachm to the euro: studies in European monetary integration – Edited by Philip L. Cottrell, Gérassimos Notaras, and Gabriel Tortella Angela Redish, Angela Redish University of British ColumbiaSearch for more papers by this author Angela Redish, Angela Redish University of British ColumbiaSearch for more papers by this author First published: 26 September 2008 https://doi.org/10.1111/j.1468-0289.2008.00447_21.xRead the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume61, Issue4November 2008Pages 1022-1024 RelatedInformation

Evaluating growth cycle synchronisation in the EU

This paper provides an insight into the level of economic and monetary integration in Europe by analysing the degree of growth cycle synchronisation between seven European countries over the past thirty years. Two univariate trend-cycle decomposition methodologies, the Beveridge–Nelson (BN) decomposition and Harvey and Trimbur [Harvey, A.C. & Trimbur, T.M. (2003) “General Model-Based Filters for Extracting Cycles and Trends in Economic Time Series”, The Review of Economics and Statistics, 85(2), 244–255.]'s unobserved component model, together with a multivariate extension of the BN decomposition incorporating trend and cycle restrictions, are used to identify the trend and cyclical components from real GDP for each of the seven countries. The cycles extracted from the two univariate approaches vary significantly in both cycle period and amplitude. The average correlation calculated from the BN cycles are also smaller than the corresponding correlation estimated using cycles extracted from the unobserved component model. This confirms the argument in Canova [Canova, F. (1998) “Detrending and Business Cycle Facts”, Journal of Monetary Economics, 41(3), 475–512.] that the use of different trend-cycle decomposition methodologies may influence the results obtained. The results produced from the multivariate model indicate the presence of common features in the data. This may reflect the coordinated and common monetary and fiscal policies that these countries have shared over the sample period. However, the finding of codependent and heterogeneous growth cycles raises concerns about the operation of the European Monetary Union (EMU), as it implies that members may face significant stabilisation costs.

Monetary integration in Europe

The History of Monetary Integration in Europe Theory of Optimum Currency Areas The Economic and Monetary Union: Institutions and Credibility The Monetary Policy Strategy of EMU Fiscal Policy Coordination and the Stability and Growth Pact The EMU and the Wage Bargain Real Convergence in a Monetary Union The New European Monetary System

The Europeanization of Italy's budget institutions in the 1990s

ABSTRACT This article examines the impact of European monetary integration on the reform of Italy's budget institutions in the 1990s. Using an approach that explicitly assesses the impact of European factors on domestic change alongside domestic factors and that follows institutional change over long periods of time, the article concludes – contrary to much of the literature on Europe's impact on Italy – that in fact Europe did not matter, or that at most it only mattered at the margin.

Non-linear growth effects of financial development: Does financial integration matter?

Using both macro- and industry-level data this paper analyses the non-linear effects of financial development and international financial integration on economic growth in Europe. Special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies' absorption capacity. Results reveal evidence of significant non-linear effects, with less developed European countries gaining more from financial development. In contrast, benefits of international financial integration become significant at higher levels of financial development. The data show that monetary integration in Europe significantly contributed to a higher degree of financial integration. Entry of new EU members to the European Monetary Union may thus be the mechanism ensuring a virtuous development circle, as the adoption of the Euro may allow the development of domestic financial markets and financial integration to go hand-in-hand.

Vom EWS zum Euro: DM und Schilling Hand in Hand (From the EMS to the Euro: DM and Schilling Hand in Hand)

The focus of this paper is on the similarities and differences of German and Austrian monetary and exchange rate policies, which are analysed against the background of the economic forces which eventually resulted in the creation of the European Monetary Union. The frontline of the struggle for achieving monetary integration in Europe ran between Germany and France, which enhances the role of the D-Mark as an anchor currency not just for Austria, but for Europe at large. In contrast to the very active role of Germany in the monetary integration process, Austria remained virtually passive. However, utilising her experience with a hard currency policy, Austria made an essential contribution to the stability of the system as a whole. Given a history of just a few years, the stability of, and the future risks for, the European monetary system are elaborated.

Non-Linear Growth Effects of Financial Development: Does Financial Integration Matter?

Using both macro and industry-level data this paper analyses the nonlinear effects of financial development and international financial integration on economic growth in Europe. Special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies' absorption capacity. Results reveal evidence of significant non-linear effects, with less developed European countries gaining more from financial development. In contrast, benefits of international financial integration become significant at higher levels of financial development. The data show that monetary integration in Europe significantly contributed to a higher degree of financial integration. Entry of new EU members to the European Monetary Union may thus be the mechanism ensuring a virtuous development circle, as the adoption of the Euro may allow the development of domestic financial markets and financial integration to go hand-in-hand.

Germany and Italy: conflicting policy paradigms towards European monetary integration?

In the literature on European monetary integration Germany and Italy are mostly strongly contrasted. However, this paper argues that there were important similarities between the policy paradigms in these two countries, in particular if a broader historical perspective is adopted. This work analyses the policy paradigms towards European monetary integration in Italy and Germany. Moreover, it contextualises these paradigms into the national institutional setting: while Germany was characterised by power sharing institutions, Italy featured power fragmentation (something which also affected the economic performance of both countries). There were significant differences between the policy paradigms of foreign policy-makers and economic policy-makers. Foreign policy makers, in both countries, under the influence of a European federalist vision, were strongly in favour of European monetary integration. These beliefs of foreign policy decision makers were crucial in charting EMU policy at history-making moments. The pro EMU policy paradigms of foreign policymakers contrasted, during most of the period covered, with the more sceptical beliefs of economic policy makers. In both countries, economic policy-makers, at different moments, had doubts whether enough “convergence” had been reached to make a more stable exchange rate system sustainable.

The euro: a concise introduction to European monetary integration

Tackling the alphabet soup of European Union treaties, structures, and policies, this straightforward introduction demystifies the European Economic and Monetary Union (EMU). Hosli first traces the history of monetary integration in Western Europe and discusses the political and economic factors that led ultimately to the establishment of EMU and the euro. Then, in language accessible to the nonspecialist, she explains how it actually works. Ranging from institutions to performance to the impact of the euro both within Europe and on the international monetary system, she provides a welcome primer on this new phenomenon in the global political economy.

La réforme du système administratif Portugais : new public managementou Etat néo-wébèrien ?

<titre>The reform of the Portuguese public administration&#160;: New Public Management or Neo Weberian State&#160;? </titre> The article analysis the recent process of reform undergone by the Portuguese public administration, begun in 2004 under the Social democrat government and continued in 2006 under the Socialist government. It acknowledges that the reform introduces aspects of managerialism, but sustains that the concept of &#8220;neo-Weberian state&#8221; (developed by Christopher Pollitt and Geert Bouckaert) describes more adequately than that of new public management the features of the Portuguese Administration as shaped by this reform. The reform is situated in a context of financial pressure resulting from the need to comply with the requirements of the Growth and Stability Pact in the context of European monetary integration. However, some of its measures can only be fully understood in the framework of the evolution of Portuguese public Administration, since they are directed at tackling specific dysfunctions that resulted from changes occurred in the three decades that preceded. A brief look at this evolution will identify some of the persistent problems that the current reform of the public Administration sought to alleviate. The article gives an account of the measures adopted, underlines the influence of managerialism (as well as of contractualism, less influential in this reform) but also the Weberian traits that persist, demonstrating that the reforms of 2004-2006 have not inscribed in the Portuguese public administration characteristics that could be fully captured by the concept of new public management. Furthermore, it underlines the bias of the reform program of 2006 towards reducing the number of administrative structures and addresses the question of whether this organic restructuring implies a reduction of the welfare functions performed by the State. It stresses the complexity of the question posed and the fact that a possible answer given on the basis of the analysis undertaken, is a limited one. Nevertheless, it argues that the reform is directed mainly at the redesign and reallocation of formal functions within the structure of the Administration (executive functions, consultative functions, management of resources), not resulting necessarily in a substantial reduction of welfare state functions. In doing so, it acknowledges the normative conception of the State underlying the reform and the possible need to review this conclusion in light of further developments.