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Systemic Conflict and Regional Monetary Integration: The Case of Europe

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  • Henning, C. Randall

Abstract

Existing explanations of European monetary integration, emphasizing economic interdependence, issue linkage, institutions, and domestic politics, take a predominantly regional approach. In the international monetary thesis developed here, I argue that U.S. policy disturbances, transmitted through the international monetary system, created compelling incentives for European states to cooperate on exchange-rate and monetary policy. I develop a general theory of macroeconomic power, based on open economy macroeconomics, and show how the exercise of such influence can drive regional monetary integration. This article then tests the international thesis with reference to monetary integration within the European Union by examining four periods in which the United States acted to stabilize the international monetary system and seven episodes in which it disrupted the system. European governments and central banks reduced regional monetary cooperation when the United States supported system stability and strengthened it after each episode of disruption. The evidence thus strongly supports the inference that the link is causal.

Suggested Citation

  • Henning, C. Randall, 1998. "Systemic Conflict and Regional Monetary Integration: The Case of Europe," International Organization, Cambridge University Press, vol. 52(03), pages 537-573, June.
  • Handle: RePEc:cup:intorg:v:52:y:1998:i:03:p:537-573_44
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    Cited by:

    1. Andrew Martin, 2000. "Social Pacts, Unemployment, and EMU Macroeconomic Policy," EUI-RSCAS Working Papers 32, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    2. C. Randall Henning, 2006. "The External Policy of the Euro Area: Organizing for Foreign Exchange Intervention," Working Paper Series WP06-4, Peterson Institute for International Economics.
    3. C. Randall Henning, 2012. "Choice and Coercion in East Asian Exchange Rate Regimes," Working Paper Series WP12-15, Peterson Institute for International Economics.

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