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Alice in Euroland

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  • Willem H. Buiter

Abstract

The article contains a detailed critique of the common currency arrangements of the Economic and Monetary Union, embodied in the laws and emerging procedural arrangements that govern the actions of its key institutions: the European Central Bank and the European System of Central Banks. The main message here is, ‘Great idea, shame about the execution’. A number of improvements are then proposed. Some of these require amending the Treaty, including an end to the rule that each EMU member’s national central bank has a seat on the Governing Council or the removal of the power of the Council of Ministers to give ‘general orientations’ for exchange rate policy. Others, notably in the areas of accountability, openness and transparency, could be implemented immediately, including publication of voting records, minutes and the inflation forecast. Improved arrangements are also advocated for the co‐ordination of monetary and fiscal policy. And the article calls for a European Parliament that can both bark and bite.

Suggested Citation

  • Willem H. Buiter, 1999. "Alice in Euroland," Journal of Common Market Studies, Wiley Blackwell, vol. 37(2), pages 181-209, June.
    • Handle: RePEc:bla:jcmkts:v:37:y:1999:i:2:p:181-209
    DOI: 10.1111/1468-5965.00159
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    References listed on IDEAS

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    1. Martin Feldstein, 1997. "The Political Economy of the European Economic and Monetary Union: Political Sources of an Economic Liability," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 23-42, Fall.
    2. Buiter, Willem H, 1997. "The Economic Case for Monetary Union in the European Union," Review of International Economics, Wiley Blackwell, vol. 5(4), pages 10-35, Supplemen.
    3. Buiter, Willem H. & Sibert, Anne, 1997. "Transition Issues for the European Monetary Union," CEPR Discussion Papers 1728, C.E.P.R. Discussion Papers.
    4. Dooley, Michael, 1998. "Speculative Attacks on a Monetary Union?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(1), pages 21-26, January.
    5. Buiter, Willem H. & Kletzer, Kenneth, 1990. "Reflections on the Fiscal Implications of a Common Currency," CEPR Discussion Papers 418, C.E.P.R. Discussion Papers.
    6. Buiter, Willem H. & Corsetti, Giancarlo & Roubini, Nouriel, 1992. "`Excessive Deficits': Sense and Nonsense in the Treaty of Maastricht," CEPR Discussion Papers 750, C.E.P.R. Discussion Papers.
    7. Robert P. Inman & Daniel L. Rubinfeld, 1998. "Subsidiarity and the European Union," NBER Working Papers 6556, National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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