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ABSTRACTChanges in formal and informal central bank independence (CBI) in France, Italy and the United Kingdom in the period from the mid‐1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks (CBs), defined as the ability to pursue price stability regardless of the government's preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the CB, the existence of anti‐inflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the CB. These broad trends help to explain some of the inflation experience of the 1980s and 1990s, which cannot be understood in terms of changes to formal CBI.

New data on the sources of finance for the non‐financial corporate sector show that Italian firms as a whole use more equity finance than their Anglo‐Saxon counterparts, and smaller Italian firms use equity more intensively than larger firms. Both findings can be understood in terms of the structure of industry and banking in Italy and the relations between them. Firm managers have considerable autonomy vis‐à‐vis both financial markets and intermediaries, and the Italian financial system should be seen as substantially different from either the high internal finance systems of the USA and the UK or the bank‐based system of Japan.

In its first few years the Eurozone seems to have experienced slow growth, with continuing high unemployment, and it has been subjected to a range of adverse comment, particularly in the 'Anglo-Saxon' press. This book brings together leading economists from Germany, Ireland, Italy, Slovakia and the US as well as the UK, to examine these 'trevails' of the Eurozone. The authors investigate the operation of monetary and fiscal policy in the Eurozone, the extent of structural reform and the reasons for it, and other topics from the possible inflation increases in the 2002 notes and coin changeover through the nature and extent of financial integration to the causes of the euro's fall and rise against the dollar and the prospects for the Central and Eastern European countries joining EMU. The papers are generally accessible, but informed by the latest in analytical and empirical research.

Preface 1. Introduction - David Cobham and Ghassan Dibeh Part I: Monetary policy frameworks 2. Monetary policy strategies, financial institutions and financial markets in the Middle East and North Africa: an overview - David Cobham 3. The political economy of stabilisation in post-war Lebanon - Ghassan Dibeh 4. The evolution of the monetary policy framework in Egypt and the elusive goal of price stability - Hoda Selim 5. Monetary policy and the central bank in Jordan - Samar Maziad 6. From occupation to an independent monetary policy: achievements and aspirations in Palestine - Jihad K. Wazir, Mohammad Atallah and Shaker A. Sarsour 7. The banking sector and macroeconomic performance: the case of Turkey - Berksoy Bilgin and Gulcin Ozkan Part II: Monetary policy strategies 8. Monetary policy strategies and exchange rate regimes on the southern shore of the Mediterranean -- developments and prospects - Thierry Bracke, Michal Franta and Jan Strasky 9. Channels and environments of monetary policy and their implications for its conduct in GCC countries - Wassim Shahin 10. Assessing inflation and output variability using a New Keynesian model: an application to Egypt - Rania Al-Mashat 11. Fiscal dominance: an obstacle to inflation targeting in Egypt - Hoda Abdel Ghaffar Youssef 12. Understanding the inflationary process in the GCC region: the cases of Saudi Arabia and Kuwait - Maher Hasan and Hesham Alogeel

The starting point of this project is the question of whether the macroeconomics of the German political establishment does indeed differ, as it often seems to do, from standard textbook macroeconomics: in particular, the former appears to neglect demand management (although it may be quite interventionist in other ways), to reject debt relief and to emphasise structural reform designed to improve competitiveness as the (only) key to economic growth. How far is this true? How much of whatever difference exists is due to a well worked out set of ideas in the form of Ordoliberalism? How does it relate to Germany's own experiences in different periods? How far is this the result of political preferences and how much do the idiosyncrasies of these German views matter, for the development of the Eurozone and indeed the health of the German economy?