Discussion Paper Details

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Title: How Will the Euro behave?

Author(s): Daniel Cohen

Publication Date: July 1997

Keyword(s): Euro, European Monetary Integration and Exchange Rate Fluctuations

Programme Area(s): International Macroeconomics

Abstract: This paper investigates theoretically and empirically the effect on exchange rates of integrating monetary policy in Europe. It shows that the likely effect will be to generate a tighter European monetary policy (notwithstanding credibility aspects which are not discussed). The argument is that trade disequilibria will be less of a threat to European monetary policy than it is at the moment. Under certain circumstances, which are explored in the text, this could lead to a more volatile euro than we have currently (as a basket of currencies).

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Bibliographic Reference

Cohen, D. 1997. 'How Will the Euro behave?'. London, Centre for Economic Policy Research.