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Europe's financial landscape has substantial institutional variety. This reflects different societal responses to (or preferences with regard to) trade-offs. For monetary policy, it implies a challenging environment, particularly in times of financial crises. Using anon-linear VAR-model we document diverging responses to an identical monetary policy impulse, especially between two states of nature (regimes). Crucially, with such heterogeneity between countries in crisis, monetary policy can become, counter-intentionally, de-stabilizing. Thus, a more homogenous financial infrastructure could mitigate such counterproductive policy effects. However, the underlying reasons for the institutional variety are rooted deeply in societal compromises. And convergence must not necessarily be towards a stronger emphasis on capital markets. ; Der Europäische Finanzsektor ist durch eine erhebliche institutionelle Vielfalt gekennzeichnet. In dieser kommen unterschiedliche gesellschaftliche Antworten (oder Präferenzen) in Bezug auf Zielkonflikte zum Ausdruck. Die einheitliche Geldpolitik ist damit vor besondere Herausforderungen gestellt, das gilt insbesondere in Krisenfällen. Mit Hilfe eines nicht-linearen vektorautoregressiven Modells dokumentieren wir die unterschiedlichen Reaktionen auf einen identischen monetären Impuls. Die Unterschiede werden insbesondere in zwei Regimen erkennbar. Zentral ist, dass vor dem Hintergrund einer solchen institutionellen Heterogenität die Geldpolitik, entgegen ihrer Absicht, in Krisenländern destabilisierend wirken kann. Von daher könnte eine einheitlichere finanzielle Infrastruktur die kontraproduktiven Politikwirkungen abmildern. Die Gründe für die institutionelle Vielfalt wurzeln allerdings tief in gesellschaftlichen Kompromissen. Und Konvergenz muss nicht notwendigerweise eine stärkere Betonung der Kapitalmarktausrichtung bedeuten.

This book seeks to explain why governments contemplate regional monetary integration and why some country groups are more likely than others to exercise that option. It also explains why some country groups may be more successful than others, and the limited relevance of the European experience for those other country groups. The book is not written for professional economists, though it synthesizes a large body of economic literature. It is written for a wider audience, including policy makers and students of international relations.

The paper tests for long‐run monetary policy convergence and short‐run policy interactions in seven ERM countries over the 1979‐1992 period using the approach of multivariate cointegration and Granger‐causality tests. The authors provide evidence for very little monetary policy convergence, even during the more stable 1987‐92 period. Tests for short‐run monetary policy interactions show that, in agreement with some other studies, Germany is not the leader country in the system as it appears to accommodate shocks in other member countries. The tests show also that full monetary policy convergence applied among Germany, Belgium and The Netherlands in the 1987‐92 period implies that these countries could be the first to join a European monetary union should a two‐speed approach to monetary union become a reality.

The first edition of this book was published in 1994, as the future of monetary unification in Europe was very much in doubt. With Economic and Monetary Union now in place, it is appropriate to bring the scholarship on the topic up to date for the students of international political economics. To this effect, essayists Jeffry Frieden, Geoffrey Garrett, Lisa L. Martin, Benjamin J. Cohen revised four of the original chapters to reflect new conditions. Editors, Barry Eichengreen and Frieden completely rewrote the introductory essay. Three new chapters by Matthew Gabel, Charles Engel, and Paul De Grauwe et al cover public support for EMU, local currency pricing, and whether Europe is now better off? The updated volume's purpose remains that of bringing the latest in scholarship in Economics and Political Science to bear on the European monetary integration.

The policies in a challenging political and economic environment are discussed in this study. The importance of reforms to enhance the budget process, tax administration, and expenditure control is encouraged. A higher growth path will require far-reaching structural reforms to bolster Comoros's competitiveness and increase the economy's ability to intermediate remittances and aid inflows. The need to improve the business environment and the management of public utilities is explained in detail

This paper employs a multi-country delegation model of a single monetary policy and argues that a decision making mechanism based on the median voter theorem is too restrictive for capturing important aspects of monetary policy in the European Monetary Union, particularly because intensity of preferences cannot play a role when only the median voter matters. Replacing the median voter mechanism by a less restrictive "weighted mean mechanism", it is shown that strategic delegation leads to a single monetary policy set in accordance with the preferences of the most inflation-averse member state. This finding provides theoretical support for "The Twin Sister Hypothesis" and the perception of the European Central Bank implementing the policy of the Bundesbank rather than the policy of an average union-wide central bank.

This study investigates whether the common monetary policy by the European Central Bank leads to asymmetric macroeconomic developments in the EU member countries. Several theoretical models of monetary unions are developed to assess how differences in particular channels of transmission translate into differences in the overall strength of monetary transmission within the EMU. As an extension to other studies in this field, we investigate not only the macroeconomic relevance of asymmetries in financial structure, but also the implications of asymmetries in goods and labor markets. In the empirical part, this study critically evaluates previous empirical evidence and presents new econometric results on asymmetric monetary transmission in Europe. The final part describes the structural changes after the establishment of EMU and evaluates their implications for asymmetric monetary transmission in Europe