The euro and exchange rate stability

Ensaios FEE, 2012

A origem e as causas da crise financeira europeia são analisadas. Dívida, desequilíbrios orçamentários, recessão e desemprego são as imagens da Europa de hoje. Esses problemas vêm sendo tratados com medidas voltadas aos interesses dos credores de corte de gasto público e aumento de impostos. Qual a perspectiva de a União Europeia (EU) reconquistar seu "momentum" em termos de integração econômica e imagem? Há outro caminho de saída da crise diferente de um prolongado regime de austeridade? A forte onda esquerdista das recentes eleições na Grã--Bretanha, na França e na Grécia foi vista como sinal de uma oposição do sentimento popular contra a quebra da rede de seguridade social e das despesas públicas em geral como solução para os problemas orçamentários, mas quanto isso pode se traduzir em mudança nas posições seguidas pela União Europeia e pelo Banco Central Europeu? Ou será que a UE está dirigindo-se sem esperança para uma fratura não apenas da Zona do Euro, mas também de seus outros instrumentos de integração econômica? O crescimento de forças nacionalistas de direita na Hungria, na França e, em menor intensidade, também na Grécia são indicativo nessa direção. Antes de tratar da questão central, é necessário começar por algumas questões fundamentais sobre o euro como sistema monetário e seu lugar na economia mundial. Ao final, algumas conclusões são tiradas da presente crise do euro em relação ao estado da teoria econômica em geral, conclusões que podem ser relevantes para o debate entre economistas no Hemisfério Sul. Crise financeira; integração econômica; teoria econômica. * Artigo recebido em maio 2012 e aceito para publicação em jul. 2012.

The CEEC are approaching the accession to the EU with a variety of exchange rate regimes. The authors find that these differences depend on economical factors as well as on the history of the countries. For that purpose, they discuss the role of the exchange rate in the stabilization of the inflation rate at the beginning of the transition from the central planning to the market economy, finding that, combining internal price liberalisation, openness to the international trade and a commitment to exchange rate stability the countries in transition ? with the exception of Slovenia ? provided the system with a nominal anchor by importing the price structure of the trade partners. Later, the capital liberalisation required for the progressive integration in the EU exposed the CEEC to speculative attacks and exchange rate pressure and most of them weakened the exchange rate commitment or withdrew it at all. The Baltic States are the only ones still maintaining a strong exchange-rate com...

Contemporary Economic Policy, 1997

This paper examines the European experience from optimum currency areas perspective with a focus on the correlation of underlying aggregate shocks within a structural vector autoregression (VAlUframework. Appropriately ident&ing supply shocks, real fiscal shocks, and nominal shocks, the paper investigates the correlations of shocks and tries to evaluate the likely adjustment and other problems that may take place with the introduction # a single currency in Europe. Using data for 20 European market economies, the paper compares original members of the European Community to new members and non-members. Shocks are mostly count y-specjcic, particularly for newer members and non-members, suggesting the importance qf alternative adjustment mechanisms other than national moneta y policies after the introduction of a single currency.

Tijdschrift voor Politieke Economie 21(4), 4-25, 1999

The paper considers what lessons can be learnt from the launch and first 6 months of formal operation of the euro. On balance, the early performance has been creditable. The very fact that a broad, inclusive Euro Area took shape on January 1, 1999, confounded many sceptics. Payments and settlement systems have performed well. Monetary policy in the Euro Area has been conjuncturally appropriate. The ‘weakness’ of the euro since it launch has been a major boon to the Euro Area. Cyclical non-synchronisation among the membersof the euro area, while a fact, is a non-issue, because even autonomous national monetary policies with flexible exchange rates cannot dampen, let alone eliminate, normal national business cycle fluctuations. The paper outlines a new approach to optimal currency areas, emphasising temporary nominal rigidities, international financial integration and a view of flexible exchange rates as a source of shocks and instability rather than as effective shock absorbers or adjustment mechanisms for fundamental shocks originating elsewhere. The only low mark on the euro score sheet reflects the lack of openness and transparency and, because of that, the inadequate accountability of the European Central Bank.

112th International Scientific Conference on Economic and Social Development – "Creating a unified foundation for Sustainable Development: Interdisciplinarity in Research and Education Book of Proceedings, 2024

Seventy years ago, the European Union was created with the aim of economic and political unification of European countries, and by the decision of the European Council at the end of the 1980s, the idea of a European monetary union was conceived, which would later result in the creation of the Euro currency and the Euro area, which was aimed at strengthening monetary policy. This paper will study the creation and analysis of the European monetary union, the development of the Euro area and the third phase of the creation of the European monetary union-the introduction and sustainability of the Euro as a European currency unit. The paper studies the concepts of the European Monetary Union and analyze the organization of monetary policy, and the concepts of the Eurozone, the creation of the Eurozone, the importance of the European Central Bank and its influence on the sustainable stability of the Eurozone and the currency. The paper also analyses economic policy and the emergence of an optimum currency area, where the analysis will focus on Mundell's theory and the long-term sustainability of the value of the Euro.

2018

L'activite economique se renforce dans les grandes zones economiques portant la croissance de l'economie mondiale a 3,5 % en 2017 contre 3,1 % en 2016. Ce scenario se poursuivrait en 2018 et 2019 avec une croissance qui atteindrait respectivement 3,7 % et 3,5 %. Meme si la normalisation de la politique monetaire se poursuivait aux Etats-Unis et debutait dans la zone euro, les politiques monetaires resteront expansionnistes. Par ailleurs, la politique budgetaire sera fortement expansionniste aux Etats-Unis, ce qui stimulera la croissance mais se traduira egalement par une augmentation du deficit budgetaire et du deficit courant. La croissance accelere egalement dans les pays emergents et passerait de 4,3 % en 2016 a 4,7 % en 2018 et 2019. Au-dela de la dynamique de court terme, se pose la question de la poursuite de la dynamique de croissance, notamment dans les pays ou le taux de chomage retrouve son niveau d'avant-crise.

1995

There is a large and growing literature on the benefits and costs of moving to a single currency in Europe. Much of the literature is theoretical in nature with very little empirical evaluation of the magnitudes of effects. This paper places some quantitative magnitudes on the scale of some issues in European monetary integration. It uses the European version of the MSG2 multicountry model to evaluate the variance of a number of European variables in the face of shocks to money markets, fiscal policy and total factor productivity, under three alternative European monetary regimes: the current European monetary system; a European monetary Union with a European central bank setting monetary policy; and a system of floating exchange rates within Europe. For each type of shock we consider the adjustment to global shocks, European wide shocks, shocks in Germany and shocks in Europe excluding Germany. Within the constraints of each monetary regime we allow any unconstrained monetary instruments to be set either cooperatively between European countries or non-cooperatively where each country is allowed to set their policy instruments to maximize an objective function. We find that no monetary regime consistently dominates for all shocks and regimes are ranked differently across European economies for the same shock. Abstracting from the serious question of policy credibility, this suggests that maintaining some flexibility in the setting of monetary policy in countries could potentially be invaluable to facilitate smooth adjustment to global, regional and country specific shocks.

European Economy Economic Papers, 2008

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2014

The present paper presents the models used by the countries that joined the Euro zone after 2000, in fixing the central parity and the evolution of the local currency towards Euro, when participating in Exchange Rate Mechanism II (ERM II). It synthesizes the main theories for determining the equilibrium exchange rate. It also presents the modality of putting them into practice in the countries that had already become members of the Euro zone. The better we know the other countries' experience in the respect of the joining process to the Euro zone, the better will Romania be able to prepare itself for adopting the unique European currency. Thus, we will be synthesize the main approaches within literature and also in the economic policy deciders' practice concerning the estimation of the equilibrium exchange rate and implicitly, of the central parity. The paper presents the modality of fixing the central parity and the experience of participating in ERM II for a number of memb...