DP1303 Designing Fiscal and Monetary Institutions for a European Monetary Union
|Author(s):||Roel Beetsma, A Lans Bovenberg|
|Publication Date:||November 1995|
|Keyword(s):||Convergence, European Central Bank, European Monetary Union, Inflation Aversion, Optimal Institutions, Structural Policies|
|JEL(s):||E52, E58, E61, E62, F42|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=1303|
This paper explores under what conditions a European Monetary Union (EMU) is an optimum currency area. The scope for an EMU increases with convergence of structural and fiscal policies, small money holdings, a conservative European Central Bank, and dependent national central banks. How national policies affect the rest of the Union once the EMU has been formed is also investigated. The case for surveillance of national structural and fiscal policies appears to depend largely on monetary arrangements in the Union.