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Towards A More Perfect EMU

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  • Wyplosz, Charles

Abstract

This paper explores the unfinished business of preparing for an harmonious monetary union, "more perfect" than the coarse model set up in the Maastricht and Amsterdam Treaties. To start with, the ECB may fear that it has to live up to its stated lexicographic mission for fear of losing credibility in the crucial start-up phase. Next, the ECB will have to re-think its official determination to only care about average European conditions. Some form of "monetary federalism" is needed, and an example is provided, using estimated central bank reaction functions. Finally, the institutional set-up is too unwieldy to deliver a good policy mix and permit adequate accountability. One money is hardly compatible with eleven governments, twelve Central Bank Governors and twelve Parliaments, each of which would be unwilling to share some power. In particular, governments will have to decide whether to allow competition among national institutions, chiefly labour markets, or whether they will look for collusion to protect the least performing ones.

Suggested Citation

  • Wyplosz, Charles, 1999. "Towards A More Perfect EMU," CEPR Discussion Papers 2252, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2252
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    References listed on IDEAS

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    1. Charles R. Bean, 1992. "Economic and Monetary Union in Europe," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 31-52, Fall.
    2. Calmfors, Lars, 1998. "Unemployment, Labour-Market Reform and Monetary Union," Seminar Papers 639, Stockholm University, Institute for International Economic Studies.
    3. Svensson, Lars E. O., 1997. "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages 1111-1146, June.
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    More about this item

    Keywords

    Accountability; European Monetary Union; Institution Design; Policy Coordination; Policy Mix;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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