Macroeconomic Policy During a Transition to Monetary Union

Willem Buiter

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The main conclusions of the paper are the following: - In order to minimize switching costs, the name of the new EU currency should be the D-mark - Differential national requirements for seigniorage revenue provide a weak case for retaining national monetary independence. - From the point of view of adjustment to asymmetric shocks, nominal exchange rate flexibility is at best a limited blessing and at worst a limited curse. - Inter-state labour mobility in the USA does not compensate for the absence of state-level exchange rate flexibility. - The absence of significant inter-member fiscal redistribution mechanisms in the EU is not an obstacle to monetary union. - Convergence or divergence in real economic performance is irrelevant for monetary union. - A common currency is the logical implication of unrestricted international mobility of financial capital. - The Maastricht criteria are unlikely to hinder monetary union. - There are no convincing economic objections left to monetary union in the EU.

Date: 1995-08
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Related works:
Working Paper: Macroeconomic Policy During a Transition to Monetary Union (1995)
Working Paper: Macroeconomic policy during a transition to monetary union (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0261

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