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External constraints and EMU

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  • Yannis, Athena

Abstract

Real Convergence and Convergence in the Transition to the Economic and Monetary Union. However, it underlies the monetary crisis in Europe and makes the achievement of EMU doubtful. Looking at real convergence, one can assess whether or not to exchange nominal exchange rates. One can also look into a potential growth in a monetary union. The means of real convergence are supply-side factors. They combine price and non-price competitiveness. In this paper I study the factors of competitiveness theoretically and empirically to estimate the strengths and weaknesses of the five main countries in the Community. Structural differences between the above-mentioned countries remain substantial. Only France and Germany seem capable of sustaining the competition in the single market without the help of a depreciating trend in their real exchange rates. Other countries have experienced nominal valuations since September 1992 which are consistent with required real depreciations.

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  • Yannis, Athena, 2004. "External constraints and EMU," MPRA Paper 90308, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90308
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    References listed on IDEAS

    as
    1. Kirrane, Chris, 2003. "The Choice of Exchange Rate Regimes for EU Accession Countries," MPRA Paper 88877, University Library of Munich, Germany.
    2. Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
    3. Kirrane, Chris, 1996. "Maastricht and Monetary Cooperation," MPRA Paper 88999, University Library of Munich, Germany.
    4. Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
    5. Kirrane, Chris, 2003. "The IMS and the Euro," MPRA Paper 88751, University Library of Munich, Germany.
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    More about this item

    Keywords

    EMU;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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