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The Design of EMU

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  • Mr. David K. H. Begg

Abstract

Pursuit of price stability may, but need not, exacerbate output fluctuations. This paper discusses the monetary strategy of the European Central Bank, the intermediate targets that this should entail, and implications for accountability, transparency, and reputation. Country-specific shocks will remain but output correlation may not reflect the old pattern of core and peripheral countries. The Stability Pact will force some countries to switch off their automatic stabilizers; others, with fewer fiscal problems, can retain them. Output correlations in EMU may reflect a fiscal core and fiscal periphery. Additional labor market flexibility remains the best solution.

Suggested Citation

  • Mr. David K. H. Begg, 1997. "The Design of EMU," IMF Working Papers 1997/099, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/099
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    Citations

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    Cited by:

    1. Lars E. O. Svensson, 1999. "Monetary policy issues for the Eurosystem," Proceedings, Federal Reserve Bank of San Francisco.
    2. Heinz Handler, 2003. "From Hard Currency Policy to Monetary Union," WIFO Working Papers 210, WIFO.
    3. Mourre, Gilles & Buddelmeyer, Hielke & Ward-Warmedinger, Melanie, 2005. "Part-time work in EU countries: labour market mobility, entry and exit," Working Paper Series 460, European Central Bank.
    4. Richard Hule & Matthias Sutter, 2003. "Can the Stability and Growth Pact in EMU Cause Budget Deficit Cycles?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(1), pages 25-38, March.
    5. Jens R. Clausen & Juergen B. Donges, 2001. "European Monetary Policy: The Ongoing Debate on Conceptual Issues," The World Economy, Wiley Blackwell, vol. 24(10), pages 1309-1326, November.
    6. Arestis, Philip & McCauley, Kevin & Sawyer, Malcolm, 2001. "An Alternative Stability Pact for the European Union," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(1), pages 113-130, January.
    7. Morys, Matthias, 2003. "Was the Bundesbank’s credibility undermined during the process of German reunification?," Economic History Working Papers 22355, London School of Economics and Political Science, Department of Economic History.
    8. Josef Baumgartner & Thomas Url, 1999. "Gemeinsame Geldpolitik – Unterschiedliche Auswirkungen?," WIFO Monatsberichte (monthly reports), WIFO, vol. 72(1), pages 75-88, January.
    9. Benczes, István, 1999. "Fiskális politika a Gazdasági és Monetáris Unióban [Fiscal policy in the European Economic and Monetary Union]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 362-379.
    10. Kieran Mc Morrow, 1998. "Is there a stable money demand equation at the Community level? - Evidence, using a cointegration analysis approach, for the Euro-Zone countries and for the Community as a whole," European Economy - Economic Papers 2008 - 2015 131, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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