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Monetary Integration and Economic Reform

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  • Sibert, Anne

Abstract

Recent research in contract theory views ownership as a substitute for complete contracts. Here, this approach is applied to monetary integration. Countries face a coordination problem conducting monetary policy. Negative spillovers ensure uncoordinated policy generates too high inflation. Ex ante, policymakers can undertake politically costly economic reform. This has a positive spillover because it improves the outcome of the monetary policy game. Ex post contracting over policy may be possible but it supposed that ex ante contracting over reform and monetary policy is not. This paper analyzes when monetary union is a good substitute for this inability to commit.

Suggested Citation

  • Sibert, Anne, 1999. "Monetary Integration and Economic Reform," Economic Journal, Royal Economic Society, vol. 109(452), pages 78-92, January.
  • Handle: RePEc:ecj:econjl:v:109:y:1999:i:452:p:78-92
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    Citations

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    Cited by:

    1. Roel M. W. J. Beetsma & Xavier Debrun, 2005. "Implementing the Stability and Growth Pact; Enforcement and Procedural Flexibility," IMF Working Papers 05/59, International Monetary Fund.
    2. Sibert, Anne & Sutherland, Alan, 2000. "Monetary union and labor market reform," Journal of International Economics, Elsevier, vol. 51(2), pages 421-435, August.
    3. Bokan, Nikola & Hughes Hallett, Andrew, 2006. "Labour and Product Market Reforms in the Economy with Distortionary Taxation," CEPR Discussion Papers 5431, C.E.P.R. Discussion Papers.
    4. Nadine Leiner-Killinger & Víctor López Pérez & Roger Stiegert & Giovanni Vitale, 2007. "Structural reforms in EMU and the role of monetary policy – a survey of the literature," Occasional Paper Series 66, European Central Bank.
    5. Acocella, Nicola & Di Bartolomeo, Giovanni & Tirelli, Patrizio, 2009. "The macroeconomics of social pacts," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 202-213, October.
    6. Andrew Hughes Hallett & Diana N. Weymark, 2001. "The Cost of Heterogeneity in a Monetary Union," Vanderbilt University Department of Economics Working Papers 0128, Vanderbilt University Department of Economics.
    7. Frank Barry, 2001. "Regional characteristics, monetary union and regional income volatility," Working Papers 200111, School of Economics, University College Dublin.
    8. Beetsma, Roel M.W.J. & Debrun, Xavier, 2007. "The new stability and growth pact: A first assessment," European Economic Review, Elsevier, vol. 51(2), pages 453-477, February.
    9. Nicola Acocella, "undated". "The theoretical roots of EMU institutions and policies during the crisis," Working Papers 126/14, Sapienza University of Rome, Metodi e modelli per l'economia, il territorio e la finanza MEMOTEF.
    10. Focco W. Vijselaar, 2000. "Macroeconomic Policy Co-ordination in the Euro Area," MEB Series (discontinued) 2000-5, Netherlands Central Bank, Monetary and Economic Policy Department.
    11. Juan Cristóbal Campoy & Juan Carlos Negrete, 2008. "Rigidities and Inflationary Bias in a Monetary Union: The Consequences of EU Enlargement," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 636-654, August.
    12. Holod, Dmytro & Reed, Robert III, 2004. "Regional spillovers, economic growth, and the effects of economic integration," Economics Letters, Elsevier, vol. 85(1), pages 35-42, October.
    13. Hughes Hallett, Andrew & Jensen, Svend E. Hougaard, 2001. "Currency unions and the incentive to reform: are market mechanisms enough?," The North American Journal of Economics and Finance, Elsevier, vol. 12(2), pages 139-155, July.
    14. Campoy Juan Cristóbal & Negrete Juan C., 2010. "Structural Reforms and Budget Deficits in a Monetary Union: A Strategic Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, July.
    15. Robert Franzese, 2001. "Strategic Interactions of Monetary Policymakers and Wage/Price Bargainers: A Review with Implications for the European Common-Currency Area," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(4), pages 457-486, December.
    16. Alex Cukierman & Alberto Dalmazzo, 2006. "Fiscal-monetary policy interactions in the presence of unionized labor markets," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(4), pages 411-435, August.
    17. Hughes Hallett, Andrew & Viegi, Nicola, 2001. "Labour Market Reform and Monetary Policy in EMU: Do Asymmetries Matter?," CEPR Discussion Papers 2979, C.E.P.R. Discussion Papers.
    18. Carsten Hefeker, 2000. "Structural Reforms and the Enlargement of Monetary Union," CESifo Working Paper Series 270, CESifo Group Munich.
    19. Alho, Kari E.O., 2006. "Structural Reforms in the EU and Political Myopia in Economic Policies," Discussion Papers 1050, The Research Institute of the Finnish Economy.

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