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Working Paper
International dimension of European Monetary Union: implications for the dollar
This paper attempts to review the different elements of the international role of the dollar and, where possible, to provide quantitative information about the current scale of dollar use and how it may be changing, including in response to European monetary union. The paper considers the exchange value of the dollar, the dollar as reserve asset, the dollar as vehicle currency, and the macroeconomic implications for the United States of the fiscal actions likely to be required for the participating EU countries to meet the fiscal convergence criteria specified in the Maastricht Treaty. The ...
Working Paper
Who will join EMU? Impact of the Maastricht convergence criteria on economic policy choice and performance
To qualify for European Monetary Union (EMU) countries must meet convergence criteria established in the Maastricht treaty of December 1991. However, an analysis of how difficult it will be to meet the convergence criteria is not sufficient to identify the countries most likely to join EMU in 1999. This paper identifies a number of factors in addition to budget deficit reduction required to qualify for EMU such as; the persistence of inflationary expectations; the variance of output shocks; the inflationary bias to monetary policy; and, the political cost to not joining EMU. Moreover, ...
Journal Article
Fiscal constraints in the EMU
Journal Article
Decision time for European Monetary Union
If the plans of European governments for economic and monetary union by the end of the decade are realized, a new common currency called the euro will be in use in at least a few western European countries within five years. Even earlier, starting in 1999, a new European Central Bank is slated to take control of monetary policy in the initial member countries. ; This article examines the economic and political factors that will determine whether monetary union proceeds on schedule and, if so, which countries are likely to be initial members. There is little chance that most of the countries ...
Journal Article
The path to European Monetary Union
Journal Article
The world's newest currency
Journal Article
European Community continues push toward monetary union
Working Paper
Monetary Union Expansion: The Role of Market Power in Trade
Among the reasons for joining a monetary union, attention has fallen on the potential for improving a nation's monetary policy credibility. In this paper, we examine the decision problem faced by an outside country deciding whether or not to join an existing monetary union. Our analysis demonstrates that enhanced credibility stemming from differences in country characteristics along are unlikely to lead to a mutually-desirable union expansion. The intuition is that any country which finds the characteristics of the existing monetary union members relatively desirable must be relatively ...