The Political Business Cycles in the EU enlarged

Mathilde Maurel

Post-Print from HAL

Abstract: The rationale behind the EU enlargement has been extensively debated3. Several authors emphasised the lack of convergence between old and new members, and the risk of jeopardizing economic growth by limiting the room for political adjustment, others considered that the process of enlargement was a way of anchoring the transition towards the market, of stabilising the economies, and of accelerating the speed of convergence and catching-up. The most popular analytical framework used for assessing the pros and cons of the enlargement of the EMU is the OCA (Optimal Currency Area) theory. Basically, the theory tells that in the absence of economic symmetry, two countries are less likely to benefit from a common currency, and that if they do, the task will be easier with flexible markets.More recent studies go further by demonstrating that the process of monetary unification is an endogenous process. Once the political decision of entering a common market and sharing the same currency has been taken, business cycles become more synchronized - thanks to the increase in intra-industry trade amongst others - internal openness increases, capital marketimperfection vanishes, contributing to ease the financing of backward regions.

Keywords: EU area; political business cycles (search for similar items in EconPapers)
Date: 2006-11
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00267475
References: Add references at CitEc
Citations:

Published in Slovenian Journal for Money and Banking, 2006, 55 (11), pp.38-41

Downloads: (external link)
https://shs.hal.science/halshs-00267475/document (application/pdf)

Related works:
Working Paper: The Political Business Cycles in the EU enlarged (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00267475

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().