Europe’s Lack of Structural Transformation and Necessary Policy Changes of EMU
AbstractPrimary goal of stabilization policy in the Treaty of European Union is price stability. That goal may be in conflict with the goal of full employment in the member states, particularly, then the union are hit by an asymmetric shock. Assuming perfect capital mobility a initial adverse shock (Krugman 1993) may have permanent effects by releasing a self-reinforcing process, which will result in lower relative growth. Given the specification of a model that captures the crucial element of efficient structural transformation it is easy to conclude the lack of necessary structural transformation within EMU. In addition, the basic foundation of economic policy by EMU, as manifested by the Treaty of European Union, is by latter research put into question. Therefore this paper suggest, it is necessary that the Treaty of European Union must be supplemented, changed, or both.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 598.
Length: 15 pages
Date of creation: 04 Dec 2002
Date of revision:
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European Monetary Union; Structural flexibility; Optimal transformation; Phillips curve; Maastricht Treaty; Stability and Growth Pact.;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-09 (All new papers)
- NEP-EEC-2002-12-09 (European Economics)
- NEP-IFN-2002-12-09 (International Finance)
- NEP-PKE-2002-12-09 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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NBER Working Papers
3275, National Bureau of Economic Research, Inc.
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