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Adjusting to EMU

Author

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  • Henrik Enderlein

    (Hertie School of Governance, Berlin, Germany)

Abstract

The article suggests an explanation for seemingly diverse patterns of change in domestic economic institutions following the establishment of Economic and Monetary Union (EMU). It argues that EMU participants redesigned ill-fitting domestic fiscal and wage-setting institutions in order to counter the anticipated destabilizing effects of the ‘one size fits all’ monetary policy of the European Central Bank (ECB). After outlining the argument, the article identifies general economic and institutional conditions that are required for the use of fiscal and wage-setting institutions as effective stabilizers in a monetary union. It then undertakes a comparative assessment to detect country-specific mismatches between anticipated needs and the available domestic economic institutions. Finally, the article surveys institutional changes in 10 member states between the mid 1990s and 2002 and shows that the observed institutional adjustments largely correspond to the expected correction of initial mismatches.

Suggested Citation

  • Henrik Enderlein, 2006. "Adjusting to EMU," European Union Politics, , vol. 7(1), pages 113-140, March.
    • Handle: RePEc:sae:eeupol:v:7:y:2006:i:1:p:113-140
    DOI: 10.1177/1465116506060914
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    References listed on IDEAS

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    Cited by:

    1. Elżbieta Bednarek-Sekunda & Richard Jong-A-Pin & Jakob de Haan, 2010. "The European Economic and Monetary Union and Labour Market Reform," European Union Politics, , vol. 11(1), pages 3-27, March.
    2. Vassilis Monastiriotis & Sotirios Zartaloudis, 2010. "Beyond the crisis: EMU and labour market reform pressures in good and bad times," LEQS – LSE 'Europe in Question' Discussion Paper Series 23, European Institute, LSE.
    3. Alison Johnston & Aidan Regan, 2016. "European Monetary Integration and the Incompatibility of National Varieties of Capitalism," Journal of Common Market Studies, Wiley Blackwell, vol. 54(2), pages 318-336, March.
    4. Johnston, Alison & Regan, Aidan, 2014. "European integration and the incompatibility of national varieties of capitalism problems with institutional divergence in a monetary union," MPIfG Discussion Paper 14/15, Max Planck Institute for the Study of Societies.
    5. Daniela Gabor, 2014. "Learning from Japan: The European Central Bank and the European Sovereign Debt Crisis," Review of Political Economy, Taylor & Francis Journals, vol. 26(2), pages 190-209, April.
    6. Zdenek Kudrna, 2014. "The future of the Euro: agreements to disagree and prospective scenarios from the 2014 Vienna debate," Working Papers of the Vienna Institute for European integration research (EIF) 3, Institute for European integration research (EIF).
    7. Ben Crum, 2013. "Saving the Euro at the Cost of Democracy?," Journal of Common Market Studies, Wiley Blackwell, vol. 51(4), pages 614-630, July.
    8. Donato Masciandaro & Davide Romelli, 2018. "To Be or not to Be a Euro Country? The Behavioural Political Economics of Currency Unions," BAFFI CAREFIN Working Papers 1883, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    9. Höpner, Martin, 2013. "Die Verschiedenheit der europäischen Lohnregime und ihr Beitrag zur Eurokrise: Warum der Euro nicht zum heterogenen Unterbau der Eurozone passt," MPIfG Discussion Paper 13/5, Max Planck Institute for the Study of Societies.

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