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The Political Economy of Monetary Union in Europe

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  • De Grauwe, Paul

Abstract

The Maastricht transition strategy towards monetary union is based on the idea that the transition strategy should be gradual, and that entry into the union should be conditional on the fulfilment of convergence criteria. It is argued in this paper that this approach is not based on an economic necessity, but on a political one. In particular, it serves the political objective of Germany to keep the union small.

Suggested Citation

  • De Grauwe, Paul, 1993. "The Political Economy of Monetary Union in Europe," CEPR Discussion Papers 842, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:842
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    1. Barry Eichengreen., 1992. "The Political Economy of Fiscal Policy After EMU," Center for International and Development Economics Research (CIDER) Working Papers C92-004, University of California at Berkeley.
    2. Giovannini, A., 1990. "The Transition To European Monetary Union," Princeton Studies in International Economics 178, International Economics Section, Departement of Economics Princeton University,.
    3. Paul De Grauwe & Wim Vanhaverbeke, 2014. "Is Europe an Optimum Currency Area? Evidence from Regional Data," World Scientific Book Chapters, in: Exchange Rates and Global Financial Policies, chapter 8, pages 231-252, World Scientific Publishing Co. Pte. Ltd..
    4. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    5. repec:cdl:econwp:qt791143kp is not listed on IDEAS
    6. Wyplosz, Charles, 1991. "Monetary Union and Fiscal Policy Discipline," CEPR Discussion Papers 488, C.E.P.R. Discussion Papers.
    7. 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.
    8. Fratianni, Michele & von Hagen, Juergen, 1990. "The European Monetary System ten years after," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 32(1), pages 173-241, January.
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    Cited by:

    1. Filippo Balestrieri & Mr. Suman S Basu, 2018. "An Imperfect Financial Union With Heterogeneous Regions," IMF Working Papers 2018/205, International Monetary Fund.
    2. Heinemann, Friedrich, 1994. "Central Europe and European monetary integration: a strategy for catching up," ZEW Discussion Papers 94-21, ZEW - Leibniz Centre for European Economic Research.
    3. Yannis, Athena, 1996. "Fiscal Federalism and EMU," MPRA Paper 90306, University Library of Munich, Germany.
    4. Joanna Tyrowicz, 2007. "The OCA Theory and Its Empirical Application for the EMU," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 45-60.
    5. Hyoung‐kyu Chey, 2009. "A Political Economic Critique on the Theory of Optimum Currency Areas, and the Implications for East Asia," The World Economy, Wiley Blackwell, vol. 32(12), pages 1685-1705, December.
    6. Pierre-Alain Muet, 1995. "Union monétaire et fédéralisme," Revue de l'OFCE, Programme National Persée, vol. 55(1), pages 151-170.
    7. C. Hefeker, 1994. "German Monetary Union, the Bundesbank and the EMS collapse," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 379-398.
    8. Crespo-Cuaresma, Jesús & Fernández-Amador, Octavio, 2013. "Business cycle convergence in EMU: A first look at the second moment," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 265-284.
    9. Jean Pisani-Ferry, 1994. "Union monétaire et convergence : qu'avons nous appris ?," Working Papers 1994-14, CEPII research center.
    10. Dellas, Harris & Tavlas, George S., 2001. "Lessons of the euro for dollarization: Analytic and political economy perspectives," Journal of Policy Modeling, Elsevier, vol. 23(3), pages 333-345, April.
    11. H.P. Grãœner & C. Hefeker, 1995. "Domestic pressures and the exchange rate regime: why economically bad decisions are politically popular?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 48(194), pages 331-350.
    12. Willett, Thomas D., 2000. "Some Political Economy Aspects of EMU," Journal of Policy Modeling, Elsevier, vol. 22(3), pages 379-389, May.
    13. Francisco Torres, 2007. "The long road to EMU: The Economic and Political Reasoning behind Maastricht," Working Papers de Economia (Economics Working Papers) 50, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
    14. Rita De Siano & Marcella D'Uva & Giovanna Messina, 1999. "Aree Monetarie Ottimali: Literature Review," Working Papers 2_1999, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

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    Keywords

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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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