Suchergebnisse

Is European Monetary Union desirable? Pascal Salin, of the Univeristy of Paris, argues that any system of fixed exchange rates such as the EMS Exchange Rate Mechanism, is likely to prove unsatisfactory.

General introduction -- General introduction -- One: Currency Competition -- I. The theory of currency competition -- II. The history of currency competition -- III. The history of monetary thought on currency competition -- IV. The current debate: The return to gold and the liberalization of banking -- Two: Monetary Union -- to Part Two. Which monetary integration? -- V. The European Monetary System -- VI. Is the adjustable peg a viable option? -- VII. Freely flexible exchange rates or a common currency? -- VIII. Exchange controls for ever? -- IX. Towards a better European Monetary System -- Appendix to Bibliographical Note (Lawrence H. White) -- The authors -- Index of names.

Inflation differentials in Europe have narrowed substantially since the inception of the European Monetary System in 1979. However, their persistence after more than a decade raises the question of why these differentials are so difficult to eliminate. Some European Community countries systematically use seignorage—financing government expenditures with money creation—while others do not. This increases the difficulty of achieving the convergence of monetary policies and inflation rates required for irrevocably fixed exchange rates in Europe. This paper, utilizing a model of government finance that minimizes the social cost of financing government expenditures, examines monetary finance in the European Community. It rejects soundly the social cost minimization model of seignorage collection.

The main statements contained in this paper can be summed up as follows: 1. The single market created a supranational economic area. It is only logical from an economic point of view that the single market should also give rise to a single currency. 2. In order to improve Europe's competitive position vis-à-vis Japan and the USA, the dollar must be rivalled by a European currency having equivalent clout. 3. The convergence criteria are economically justified. Stable prices, low interest rates, the reduction of dramatically inflated national debts and the elimination of competitive devaluations stimulate investment, jobs and growth. 4. The European Central Bank will assume the status of a European monetary government. If an equal effort is to be made to achieve employment and social policy objectives, then an economic government and a social government are also required. 5. The task of an economic government, in the form of a harmonised economic policy for the EU Member States, is to promote job-creating investment in new technologies and modern infrastructure projects. 6. The task of a social government, in the form of Union-wide coordinated trade union representation, is to safeguard social standards, participation rights and wage claims. 7. Only the trio of Monetary, Employment and Social Union make sense and entail genuine legitimacy. 8. In the light of the ongoing trend towards globalisation, the cost of failure and the associated re-establishment of putatively wholly sovereign nation states would be counter-productive for all countries in Europe.

This paper examines the historical pattern of aggregate demand and supply shocks in several European Monetary System countries in order to assess the desirability of monetary union. Countries with similar patterns of shocks are presumably better candidates for monetary union than those hit by wildly disparate shocks. The historical time series of shocks is identified by estimating a vector autoregressive model while imposing the restriction that demand shocks have no permanent effect on real output. In most cases supply shocks are positively correlated with those of Germany, but the negative correlation of demand shocks suggests that monetary union may not be desirable.

How should European monetary coordination develop? John Chown and Geoffrey Wood argue that the European central banks should be forced to compete in providing the best monetary services.

The recent crisis in the ERM has meant EMU can no longer proceed along
the lines proposed in the Maastricht Treaty. Proposes that a two or
even multi‐speed EMU should emerge from the crisis. This would be based
on a "hardcore" which would form the basis for exchange rate/macro
policy management for "softer" countries.