European monetary integration after EU enlargement
Expectations about additional short-run gains from joining monetary union should not be too optimistic. Most of the expected gains from a monetary union are largely endogenous to credible, time-consistent domestic policies. Mere euro area membership is not a replacement for that. However, monetary integration has a role in supporting such policies and completing monetary integration, i.e., introducing the common currency can lock in the gains realized so far. The new member states made considerable progress with respect to the monetary and fiscal Maastricht criteria but inflation is still a concern in some countries and fiscal deficits are considerably too high for the majority of countries. However, experience with the run-up to EMU in the second half of the nineties shows that disinflation and fiscal consolidation can be achieved without major damage to growth. Additionally, structural real appreciation is unlikely to lead to an inconsistency of the inflation and the exchange rate targets. The experience with the currency board systems in Estonia, Lithuania, and Bulgaria reveals no evidence that the absence of an active exchange rate policy exacerbated the effects of external shocks. However, at the same time, the discipline demanded by the currency board system may have supported structural reforms. Hence, for countries which are determined to introduce the euro a currency board system may help to establish and maintain credibility within a consistent macroeconomic strategy. The experience with inflation targeting in Poland, the Czech Republic, and, more recently, Hungary shows that inflation targeting in general works successfully: it is not too soft because the Maastricht criteria guide the inflation target and it is not too rigid because new member states still need to establish credibility. The three countries should enhance the credibility of the inflation targeting regimes by thorough banking supervision and thorough fiscal policy. There is no generally superior exchange rate regime that provides a golden way to bridge the transition period to full EMU membership. While there is no reason to view monetary integration with rose-tinted glasses, there is also no reason to believe that joining the ERM II is sufficient to provide a safe haven with respect to financial stability. Even countries with sound and consistent macroeconomic policies and fulfilling all criteria - be it Copenhagen or Maastricht - will still run the risk that markets turn against them.
|Date of creation:||2004|
|Contact details of provider:|| Postal: Kiellinie 66, D-24105 Kiel|
Phone: +49 431 8814-1
Fax: +49 431 8814528
Web page: http://www.ifw-kiel.de/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alexander, Volbert & von Furstenberg, George M. & Melitz, Jacques (ed.), 2004. "Monetary Unions and Hard Pegs: Effects on Trade, Financial Development, and Stability," OUP Catalogue, Oxford University Press, number 9780199271405.
- Lucio Vinhas de Souza, 2002. "Integrated monetary and exchange rate frameworks: are there empirical differences?," Bank of Estonia Working Papers 2002-2, Bank of Estonia, revised 12 Oct 2002.
- Glenn Rudebusch & Lars E.O. Svensson, 1999.
"Policy Rules for Inflation Targeting,"
NBER Chapters,in: Monetary Policy Rules, pages 203-262
National Bureau of Economic Research, Inc.
- Glenn D. Rudebusch & Lars E. O. Svensson, 1998. "Policy rules for inflation targeting," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
- Glenn D. Rudebusch & Lars E. O. Svensson, 1998. "Policy Rules for Inflation Targeting," NBER Working Papers 6512, National Bureau of Economic Research, Inc.
- Glenn D. Rudebusch & Lars E. O. Svensson, 1998. "Policy rules for inflation targeting," Working Papers in Applied Economic Theory 98-03, Federal Reserve Bank of San Francisco.
- Svensson, Lars E.O. & Rudebusch , Glenn, 1998. "Policy Rules for Inflation Targeting," Seminar Papers 637, Stockholm University, Institute for International Economic Studies.
- Rudebusch, Glenn D & Svensson, Lars E O, 1998. "Policy Rules for Inflation Targeting," CEPR Discussion Papers 1999, C.E.P.R. Discussion Papers.
- Rudebusch, G.D. & Svensson, L.E.O., 1998. "Policy Rules for Inflation Targeting," Papers 637, Stockholm - International Economic Studies.
- Christoph Fischer, 2004. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 179-210, June.
- Fischer, Christoph, 2002. "Real currency appreciation in accession countries : Balassa-Samuelson and investment demand," BOFIT Discussion Papers 8/2002, Bank of Finland, Institute for Economies in Transition.
- Fischer, Christoph, 2002. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Discussion Paper Series 1: Economic Studies 2002,19, Deutsche Bundesbank, Research Centre.
- Agnès Bénassy-Quéré & Amina Lahrèche-Révil, 2000. "The Euro as a Monetary Anchor in the CEECs," Open Economies Review, Springer, vol. 11(4), pages 303-321, October.
- Carare, Alina & Stone, Mark R., 2006. "Inflation targeting regimes," European Economic Review, Elsevier, vol. 50(5), pages 1297-1315, July.
- Alina Carare & Mark R. Stone, 2003. "Inflation Targeting Regimes," IMF Working Papers 03/9, International Monetary Fund.
- Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
- Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," NBER Working Papers 5893, National Bureau of Economic Research, Inc.
- Eichengreen, Barry & Bayoumi, Tamim, 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Center for International and Development Economics Research, Working Paper Series qt5dt9501s, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Tamim Bayoumi and Barry Eichengreen., 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Center for International and Development Economics Research (CIDER) Working Papers C96-078, University of California at Berkeley.
- Eichengreen, Barry & Bayoumi, Tamim, 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Department of Economics, Working Paper Series qt5th597st, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Cukierman, Alex & Miller, Geoffrey P. & Neyapti, Bilin, 2002. "Central bank reform, liberalization and inflation in transition economies--an international perspective," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 237-264, March.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000. "Central Bank Rerform, Liberalization and Inflation in Transition Economies - an International Perspective," Papers 2000-19, Tel Aviv.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000. "Central Bank Reform, Liberalization and Inflation in Transition Economies : An International Perspective," Discussion Paper 2000-106, Tilburg University, Center for Economic Research.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000. "Central Bank Rerform, Liberalization and Inflation in Transition Economies - an International Perspective," Papers 00-19, Tel Aviv.
- Cukierman, Alex & Miller, Geoffrey & Neyapti, Bilin, 2001. "Central Bank Reform, Liberalization and Inflation in Transition Economies - An International Perspective," CEPR Discussion Papers 2808, C.E.P.R. Discussion Papers.
- Edwin M. Truman, 2003. "Inflation Targeting in the World Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 346, November.
- Michael R. Pakko & Howard J. Wall, 2001. "Reconsidering the trade-creating effects of a currency union," Review, Federal Reserve Bank of St. Louis, issue May, pages 37-46.
- Gabriele Galati & Kostas Tsatsaronis, 2001. "The impact of the euro on Europe's financial markets," BIS Working Papers 100, Bank for International Settlements.
- Ansgar Belke & Daniel Gros, 2001. "Real Impacts of Intra-European Exchange Rate Variability: A Case for EMU?," Open Economies Review, Springer, vol. 12(3), pages 231-264, July.
- Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc.
- Zenon Kontolemis, 2003. "Exchange rates are a matter of common concern: policies in the run-up to the euro?," European Economy - Economic Papers 2008 - 2015 191, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Schweickert, Rainer, 1998. "Chancen und Risiken eines Currency Board Systems," Open Access Publications from Kiel Institute for the World Economy 1786, Kiel Institute for the World Economy (IfW).
- Fabrizio CORICELLI & Bostjan JAZBEC & Igor MASTEN, 2004. "Exchange Rate Pass-Through in Acceding Countries: The Role of Exchange Rate Regimes," Economics Working Papers ECO2004/16, European University Institute.
- Peter Backé & Christian Thimann & Olga Arratibel & Oscar Calvo-Gonzalez & Arnaud Mehl & Carolin Nerlich, 2004. "The acceding countries’ strategies towards ERM II and the adoption of the euro - an analytical review," Occasional Paper Series 10, European Central Bank.
- Egert, Balazs & Drine, Imed & Lommatzsch, Kirsten & Rault, Christophe, 2003. "The Balassa-Samuelson effect in Central and Eastern Europe: myth or reality?," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 552-572, September.
- Bal??zs ??gert & Imed Drine & Kirsten Lommatzsch & Christophe Rault, 2002. "The Balassa-Samuelson effect in Central and Eastern Europe: Myth or reality?," William Davidson Institute Working Papers Series 483, William Davidson Institute at the University of Michigan.
- Balázs Égert & Imed Drine & Kirsten Lommatzsch & Christophe Rault, 2005. "The Balassa-Samuelson Effect in Central and Eastern Europe: Myth or Reality?," Documents de recherche 05-15, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
- Schweickert, Rainer, 2001. "EU Enlargement and the Euro? One Money for All the Europes?," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 5(2), pages 79-109, December.
- Lucio Vinhas de Souza & Holger van Eden & Albert de Groot & Gerbert Romijn & Elisabeth Ledrut, 2001. "EMU and Enlargement: A Review of Policy Issues," Macroeconomics 0012019, EconWPA.
- Mark Zelmer & Andrea Schaechter, 2000. "Adopting Inflation Targeting; Practical Issues for Emerging Market Countries," IMF Occasional Papers 202, International Monetary Fund. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkdp:413. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.