Voting requirements, concessions, international side payments and the European Monetary Union

This paper addresses the question of criteria for selection of EMU members. We identify two factors in the decision process: (1) The costs and benefits which the individual countries attribute to alternative EMU arrangements (`hard-core', medium-sized, all EU members), and (2) the binding institutional restrictions, i.e., the distribution of votes in the European Council and the minimum vote requirements. Within this framework the EU countries are assigned to different groups according to their degree of convergence. Based on stability concessions and side payments these groups decide on the final EMU composition. We show that minimum vote requirements can lead to a suboptimal size of the EMU and can threaten the feasibility of a multi-speed monetary union.     

Law in Modern Society

In this article, we study the relationship between monetary policy and the socio-institutional framework. Specifically, we examine the economic policy response to the debt crisis of the Eurozone, applying institutional economics from two perspectives: the theory of social power and the endogenous money supply. The research question is whether monetary policy can be characterized as a countervailing power exercised by European institutions with respect to the member countries. Fiscal and monetary policies have been interpreted through these sources and types of power, as proposed by Galbraith, by distinguishing between those types of power that have had a permanent versus a conjunctural character. We conclude that European Quantitative Easing can be characterized as having been a countervailing power. All of this has strengthened European institutional power despite having been manifested in the context of an economic and financial crisis.     

Co‐Movement Towards a Currency or Monetary Union? An Empirical Study for New Zealand

This paper analyses whether New Zealand would be ready to form a currency or monetary union with either Australia, the 11 EU countries that are members of the EMU, Japan, or the US, if the criteria that have been used by researchers for the EMU are applied. The analysis is an empirical study with data from the mid 1980s to 1998, using cointegration techniques to search for co-movement and convergence in key economic variables: interest rates, inflation rates, exchange rates, real GDP, and current-account/GDP ratios.     

Costs and benefits of unilateral euroization in central eastern Europe

Countries unable or unwilling to join a monetary union can replicate most membership effects unilaterally through either a currency board or the formal replacement of domestic currency by that of the Union. Potential benefits include lower transaction costs, lower interest rates, and lower exposure to speculative attacks. Costs include initial reserves, inadequate response to asymmetric shocks, loss of seigniorage, no lender of last resort. Expected costs and benefits have probably been exaggerated. Net effects depend primarily on the degree of monetary, real, and institutional convergence. Positive net advantages will accrue to countries that are either already converging, or wish to use a single currency to speed up convergence — especially if small. There is no legal or economic justification for EU aversion to unilateral euroization in accession candidate countries. JEL classification: F33, F36, E58, P33.     

重新认识货币区：一个新的视角

本文将货币区视为有关国家扩展政府边界的一种努力，由于在经济学的意义上我们有理由认定有政府的状态总是好于无政府的状态，因此这种努力就具有改进全球福利的意义。当然，任何一个国家尤其是民族国家一开始都不愿意政府边界的国际扩展危及自身的货币权力界限，相互之间的冲突也就在所难免。本文依据蒙代尔定理，着力讨论了国际货币冲突及其博弈均衡的内在机理，认为货币区的产生是经济理性对国家主义的一种胜利，但货币区本身并不是一个一劳永逸的最后结局。随后本文以美元和欧元为例进一步阐发了货币区的演进逻辑，最后从重商主义经济角度切入探讨了亚洲货币区的有关问题并就中国的对策提出了若干建议。     

The bank lending channel of monetary policy in EU countries during the global financial crisis

The study examines the existence of the bank lending channel of monetary policy in European Union (EU) countries. The paper advances current research on the monetary transmission mechanism in the following ways: Firstly, we analyze the differences between ‘old’ Economic Monetary Union (EMU) and ‘new’ EU countries. Secondly, we examine the key bank characteristics and monetary policy indicators that may have an impact on the bank lending channel. We assume that short-term market interest rates and monetary aggregate M2 affect banks' activities. We apply the generalized method of moments (GMM) with pooled data from 1999 to 2012. We show that in the pre-crisis period the effect of changing the short-term market interest rates on the bank lending channel of monetary policy is more pronounced among ‘old’ EMU countries, whereas the effect of M2 is significant during the period of the global financial crisis (GFC) among ‘old’ EMU countries. Last but not least the important finding is that banks in ‘new’ EU countries react differently to monetary shocks.     

European Monetary Integration and the ‘Constitutionalization’ of Macroeconomic Policy Making

This work discusses the constitutionalization of rules in macroeconomic policy-making in the European Union (EU) with reference to European monetary integration. The analysis deals with two main monetary arrangements, the European Monetary System (EMS) and the Economic and Monetary Union (EMU), and focuses on one country - Italy. Using an interdisciplinary perspective and a constitutional political economy approach, three sets of factors are identified to explain how and why policy-makers may decide to self-limit their sovereignty in monetary and fiscal policies, as they have done in the process of European monetary integration. It is argued that such factors influenced the dynamics and evolution of the European monetary arrangements, shaping the path to EMU.     

The EU attitude to unilateral euroization: Misunderstandings,real concerns and sub‐optimal admission criteria

European Union objections to unilateral euroization by applicant countries are categorized as either a misunderstanding of what euroization entails or as justified concern, which should be alleviated by candidates wishing to euroize. Some ways in which candidates can alleviate concerns are discussed, as well as possible adjustments to the Maastricht criteria which might better protect both sides' interests. The paper concludes that the EU would benefit if it accepted unilateral euroization by applicants. JEL classification: E42, F33, F42, P24.     

Financial integration and the construction of historical financial data for the Euro Area

Time series analysis for the Euro Area requires the availability of sufficiently long historical data series, but the appropriate construction methodology has received little attention. The benchmark dataset, developed by the European Central Bank for use in its Area Wide Model (AWM), is based on fixed-weight aggregation across countries with historically distinct monetary policies and financial markets of varying international importance. This paper proposes a new methodology for producing back-dated financial series for the Euro Area, that is based on the time-varying distance of periphery countries from core countries with respect to monetary integration. Historical decompositions of the residuals of vector autoregressive models of the Euro Area economy are then used to explore and compare the monetary policy implications of using the new methodology versus the use of AWM fixed weight series.     

Convergence of fiscal pressure in the EU: a time series approach

The study of fiscal convergence in the EU is a relevant issue in the context of economic integration and fiscal harmonization and we report new empirical evidence on this topic using a time series approach. We apply unit root and stationarity tests with an endogenous break for the study of long run, deterministic and stochastic convergence of the national tax burden taking Germany, the United Kingdom and the European average as benchmarks. Only the United Kingdom and Germany show long run convergence and few countries converge despite harmonization efforts and fiscal competition.     

欧洲中央银行货币政策透明度研究

大多数国家的央行开始摈弃隐秘性传统,其货币政策逐渐走向开放和透明。如何最充分、准确、及时地向公众披露与解释货币政策目标、策略和决策已成为多数国家货币政策操作所面临的首要问题,本文首先对欧洲中央银行在实践中所采用的主要沟通策略和工具进行归纳和介绍,然后将欧洲中央银行与世界其他主要中央银行的信息公开程度进行横向比较,最后就关于提高欧洲中央银行货币政策透明度的相关建议和争议进行评述。     

Real Convergence,Capital Flows,and Competitiveness in Central and Eastern Europe

The paper scrutinizes the role of capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa–Samuelson model by international capital markets to trace cyclical deviations of real exchange rates from the productivity‐driven equilibrium path. Panel estimations for the period from 1998 to 2009 reveal strong evidence for the Balassa–Samuelson effect and mixed results for the role of capital flows for international competitiveness of the Central and Eastern European countries.     

Is there a “real divergence” in the European Union? A comment

In a recently published paper, Hein and Truger [Hein, E., Truger, A., 2005. European monetary union: nominal convergence, real divergence and slow growth? Structural Change and Economic Dynamics 16, 7–33], state that real per capita income in the European Union has developed a long-run process of divergence (real divergence). We discuss their approach towards measuring cross-national income inequality and its evolution over time, and argue that there are good reasons to pursue alternative procedures. We show that alternative measures yield different conclusions concerning the convergence/divergence of prosperity across the EU. Especially, as the divergence result is driven by one or two countries with almost negligible population shares, accounting for population size implies that cross-national income dispersion in the EU has decreased at least since the mid-1990s.     

Selected transition and Mediterranean countries: an institutional primer on EMU and EU accession

The paper examines the institutional channels through which Economic and Monetary Union (EMU) in the European Union (EU) can affect the transition countries of Central and Eastern Europe and three Mediterranean countries that aspire to join the EU.
After describing the current institutional framework for relations between the EU and these countries, the paper considers two categories of institutional implications of EMU. The first stems from the need to satisfy the Maastricht convergence criteria before joining the euro area. Although the Maastricht criteria are not accession criteria, many of the countries reviewed are already formulating their macroeconomic policies in a way that will facilitate convergence toward the Maastricht targets. The second implication stems from the need to adopt the EU's institutional and legal provisions in the area of EMU, such as those referring to the establishment of independent central banks, the prohibition of central bank financing of the government and the liberalization of capital movements. Finally, the paper discusses some of the key policy issues that EMU raises for the countries reviewed, in particular regarding exchange rate policy, capital account liberalization and the possible conflict between growth-enhancing measures and the Maastricht criteria.     

Monetary policy games and international migration of labor in interdependent economies

"In this paper we incorporate the possibility of international migration into a monetary policy game played by governments in unionized interdependent economies. We show that contrary to usual presumptions, established by earlier studies that ignore the possibility of international migration, inter-government cooperation in the monetary field may well turn out to be advantageous. This has important implications for the European economies, since it suggests that measures taken towards encouraging international migration within EU [the European Union] will not only harmonize the European labor markets but will also make monetary policy cooperation within Europe, as required by the Maastrict Treaty, more advantageous."     

人民币国际化与国际货币体系改革

从美国债务上限调整的议案及美国信贷主权评级的下调,可见现行由美元和欧元所组成的二元国际货币体系并不稳定。为测度出人民币的引入能否增加国际货币体系的稳定性,本文先建立面板回归模型分析影响一国货币国际化的基础条件因素,并在模型的基础上,测度出人民币在可自由兑换后将成为一个能与欧元相互抗衡的国际货币。通过方差比较,本文论证了由美元、欧元和人民币三种货币所组成的外汇储备组合较二元体系下的稳定,说明人民币国际化有助于改革现行的二元体系,使国际货币体系发展成为更稳定的三元体系,从而促进全球经济的健康发展。     

EMU, MAASTRICHT, AND THE 1996 INTERGOVERNMENTAL CONFERENCE

This paper presents various economic approaches to achieving monetary union, particularly in the context of European Economic and Monetary Union (EMU) as envisaged in the 1991 Maastricht Treaty. It evaluates the implications of Maastricht, given the economic convergence criteria embodied in the Treaty, in terms of economic policy for individual Member States and for the European Union (EU) as a whole. The paper assesses the EU's options for amending the Maastricht Treaty at its scheduled inter-governmental conference (IGC).     

Fiscal restrictions and monetary union: Rationales,repercussions, reforms

We offer a critique of the fiscal preconditions for participation in Stage III of EMU and the Excessive Deficit Procedure of the Maastricht Treaty. We show that the high output costs associated with meeting the fiscal preconditions in Stage II and the incompatibility of the reference values for fiscal policy with other convergence criteria make it unlikely that a mechanical interpretation of those conditions will govern admission to Stage III. Knowledge of this fact will deter governments from undertaking major fiscal adjustments in the first place. Hence, the fiscal criteria of the treaty will not function as an efficient filter for distinguishing countries that are and are not prepared to live with the fiscal consequences of EMU.In Stage III, the function of the Excessive Deficit Procedure is to buttress the European Central Bank's protection from demands for a central bank bailout in the event of a debt crisis in a participating state. We show that other aspects of EU fiscal structure, namely the retention by member states of the bulk of their own revenue-raising capacity, should suffice to restrain the demand for a central bank bailout and the pressure on the ECB to supply it. Until political union follows monetary union, leading to the centralization of fiscal functions and revenu-raising capacity in the EU itself, the Excessive Deficit Procedure will be redundant. If there remains any reason to doubt the credibility of the no-bailout rule, then the best way to buttress it is directly, by further insulating the ECB from pressure to extend a bailout.If it is felt that policy in EU member states is biased toward excessive deficits, then the appropriate place to address this problem is at the national level. A limited approach would involve steps to insure that negotiations over the budget occur in the context of a firm general constraint on the overall level of spending. A more far-reaching reform would involve the creation of National Debt Boards to offset the prevailing bias.     

应对新冠疫情冲击的货币政策国际协调

新冠疫情冲击了世界经济增长和金融市场稳定。很多国家推出极度宽松货币政策应对危机。从经典货币政策国际协调的博弈理论来看,应对本次疫情冲击的各国货币政策协调性不足,“以邻为壑”的非合作均衡效果明显。为数不多的货币政策协调也存在执行力不足、深度与广度不够、新兴市场国家话语权低等问题。在世界经济紧密联系、货币政策溢出效应加强的背景下,为了应对疫情冲击,国际组织需要创设协议和合作剩余分配机制,寻找货币政策刺激效果和防止国际资产泡沫之间的平衡,加强政策沟通和信息共享,提高新兴市场国家话语权,建设有效的应对危机的货币政策国际协调机制。中国应在“一带一路”倡议的框架下建立长期货币政策协调机制,在现有的IMF和G20等平台上发挥发达国家与新兴市场国家之间的协调桥梁作用,通过持续开展央行间技术性合作等措施参与和推进协调进程。     

The transmission of euro area monetary policy to financially euroized countries

This paper provides a comprehensive analysis of the interest rate pass-through of euro area monetary policy to retail rates outside the euro area, contributing to the literature on the consequences of unofficial financial euroization and on the transmission channels of monetary policy spillovers. The results suggest that in the long run, more than the one-third of all euro retail rates in euroized countries of central, eastern, and south-eastern Europe is linked to the euro area shadow rate. Compared with euro area monetary policy, the share of cointegration of the domestic monetary policy rate is on average lower, suggesting that domestic central banks in euroized countries with independent monetary policy can only partially control the “euro part” of the interest rate channel. Furthermore, euro area monetary policy shocks are fast and persistently transmitted into euro retail rates outside the euro area, which constitutes an additional channel of international shock transmission.