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Beyond Emu: The Problem Of Sustainability

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  • BENJAMIN J. COHEN

Abstract

A common currency, as envisioned in the Maastricht treaty, is thought to be the surest way to "lock in" commitments to monetary cooperation among sovereign states. But historical evidence suggests otherwise. Comparative analysis of six currency unions demonstrates that while economic and organizational factors are influential in determining the sustainability of monetary cooperation, interstate politics matters most. Compliance with commitments is greatest in the presence of either a locally dominant state, willing and able to use its influence to sustain monetary cooperation, or a broad network of institutional linkages sufficient to make the loss of monetary autonomy tolerable to each partner. Copyright 1993 Blackwell Publishers Ltd..

Suggested Citation

  • Benjamin J. Cohen, 1993. "Beyond Emu: The Problem Of Sustainability," Economics and Politics, Wiley Blackwell, vol. 5(2), pages 187-203, July.
  • Handle: RePEc:bla:ecopol:v:5:y:1993:i:2:p:187-203
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    References listed on IDEAS

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    1. Mark P. Taylor & Peter Isard & Morris Goldstein & Paul R Masson, 1992. "Policy Issues in the Evolving International Monetary System," IMF Occasional Papers 96, International Monetary Fund.
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    Cited by:

    1. Rose, Andrew, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," Seminar Papers 678, Stockholm University, Institute for International Economic Studies.
    2. Dellas, Harris & Tavlas, George S., 2001. "Lessons of the euro for dollarization: Analytic and political economy perspectives," Journal of Policy Modeling, Elsevier, vol. 23(3), pages 333-345, April.
    3. Lars Jonung & Fredrik Sjöholm, 1999. "Should Finland and Sweden Form a Monetary Union?," The World Economy, Wiley Blackwell, vol. 22(5), pages 683-700, July.
    4. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 653-675.
    5. Francesco Menoncin & Marco Tronzano, 2005. "Is a Monetary Union a Never-Ending Story?," Revue économique, Presses de Sciences-Po, vol. 56(1), pages 25-49.
    6. Khalid Kisswani & Salah Nusair, 2014. "Nonlinear convergence in Asian interest and inflation rates: evidence from Asian countries," Economic Change and Restructuring, Springer, vol. 47(3), pages 155-186, August.
    7. Eichler, Stefan, 2012. "Financial crisis risk, ECB “non-standard” measures, and the external value of the euro," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(3), pages 257-265.
    8. Carsten Hefeker & Michael Neugart, 2015. "Fiscal Transfers in a Monetary Union with Exit Option," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 489-508, August.
    9. Andrew Moravcsik, 2008. "The European Constitutional Settlement," The World Economy, Wiley Blackwell, vol. 31(1), pages 158-183, January.
    10. Fuchs, William & Lippi, Francesco, 2003. "Monetary Union with Voluntary Participation," CEPR Discussion Papers 4122, C.E.P.R. Discussion Papers.
    11. Jarko Fidrmuc & Jan Fidrmuc, 2000. "Integration, Disintegration and Trade in Europe: Evolution of Trade Relations During the 1990s," Working Papers 42, Oesterreichische Nationalbank (Austrian Central Bank).
    12. Fidrmuc, J. & Horváth, J., 1998. "Stability of Monetary Unions : Lessons from the Break-Up of Czechoslovakia," Discussion Paper 1998-74, Tilburg University, Center for Economic Research.
    13. Balogun, Emmanuel Dele, 2007. "Monetary policy and economic performance of West African Monetary Zone Countries," MPRA Paper 4308, University Library of Munich, Germany.
    14. Etienne B Yehoue, 2005. "International Risk Sharing and Currency Unions; The CFA Zones," IMF Working Papers 05/95, International Monetary Fund.
    15. Goodhart, Charles A. E., 1998. "The two concepts of money: implications for the analysis of optimal currency areas," European Journal of Political Economy, Elsevier, vol. 14(3), pages 407-432, August.
    16. Marc-Alexandre Sénégas, 2010. "La théorie des zones monétaires optimales au regard de l'euro : Quels enseignements après dix années d'union économique et monétaire en Europe ?," Revue d'économie politique, Dalloz, vol. 120(2), pages 379-419.
    17. Arne Heise & Özlem Görmez Heise, 2010. "Europäische Wirtschaftsregierung - Notwendige Ergänzung der EWU oder unrealistische Illusion?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 36(3), pages 325-347.
    18. Mkenda, Beatrice Kalinda, 2001. "Is East Africa an Optimum Currency Area?," Working Papers in Economics 41, University of Gothenburg, Department of Economics.
    19. Balogun, Emmanuel Dele, 2008. "An Empirical Test of Trade Gravity Model Criteria for the West African Monetary Zone (WAMZ)," MPRA Paper 7083, University Library of Munich, Germany.
    20. Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
    21. Etienne B Yehoue, 2007. "The CFA Arrangements; More than Just An Aid Substitute?," IMF Working Papers 07/19, International Monetary Fund.
    22. Eichler, Stefan & Hielscher, Kai, 2012. "Does the ECB act as a lender of last resort during the subprime lending crisis?: Evidence from monetary policy reaction models," Journal of International Money and Finance, Elsevier, vol. 31(3), pages 552-568.

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