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Why is Europe forming a monetary union?

Author

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  • Gwen Eudey

Abstract

On January 1, 1999, 11 European countries will officially become a monetary union with one currency, the euro. Forming a monetary union brings benefits, such as increased trade between countries. But it carries costs as well. To join the union, each country must cede its right to set individual monetary and exchange-rate policies. Yet each country’s economic situation may differ from that of its fellow union members. How will these countries--and the union--fare when economic shocks hit, especially shocks that affect one country or region more than another? In this article, Gwen Eudey weighs the benefits and costs of European monetary union and discusses some of the issues involved.

Suggested Citation

  • Gwen Eudey, 1998. "Why is Europe forming a monetary union?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 13-21.
  • Handle: RePEc:fip:fedpbr:y:1998:i:nov:p:13-21
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    File URL: http://www.phil.frb.org/files/br/brnd98ge.pdf
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    References listed on IDEAS

    as
    1. Eichengreen, Barry, 1993. "European Monetary Unification," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1321-1357, September.
    2. Brian A. Cromwell, 1994. "California recession and recovery," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue apr29.
    3. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    4. Maurice Obstfeld, 1997. "Europe's Gamble," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 241-317.
    5. Sinn, Hans-Werner, 1996. "International Implications of German Unification," CEPR Discussion Papers 1508, C.E.P.R. Discussion Papers.
    6. Joseph A. Whitt, 1997. "Decision time for European Monetary Union," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 20-33.
    7. Jose Vinals & Juan F. Jimeno, "undated". "Monetary union and european unemployment," Working Papers 96-22, FEDEA.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jeffrey M. Wrase, 1999. "The euro and the European Central Bank," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-14.
    2. repec:ejw:journl:v:7:y:2010:i:1:p:4-52 is not listed on IDEAS

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