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European Monetary Union: an old Keynesian guide to issues

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  • T.I. PALLEY

    (American Federation of Labor and Congress of Industrial Organizations)

Abstract

The work adopts an old Keynesian perspective to evaluate the EMU. Such a perspective raises concerns with the effectiveness of monetary policy, the feasibility of monetary policy, and the political economy of monetary policy. The EMU brings with it institutional lock-in, and therefore needs to be evaluated with a long term perspective. Whether or not to join the EMU depends on whether effective sovereign monetary policy is feasible now and in the future, whether the EMU constitutes an optimal currency area, and whether the proposed European Central Bank will have an appropriate institutional design. If formed, the EMU should create institutions which promote expansionary policies and empower the conduct of sovereign European monetary policy.

Suggested Citation

  • T.I. Palley, 1997. "European Monetary Union: an old Keynesian guide to issues," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 50(201), pages 147-164.
    • Handle: RePEc:psl:bnlqrr:1997:22
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    References listed on IDEAS

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    12. Pivetti, Massimo, 1993. "Bretton Woods, through the Lens of State-of-the-Art Macrotheory and the European Monetary System," Contributions to Political Economy, Oxford University Press, vol. 12(0), pages 99-110.
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    Cited by:

    1. Marc Lavoie, 2015. "The Eurozone: Similitudes and differences with Keynes's Plan," IMK Working Paper 145-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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    More about this item

    Keywords

    European monetary union; European central bank; Optimal currency area; Sovereign monetary policy;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F02 - International Economics - - General - - - International Economic Order and Integration

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