Integration in the EU and Monetary Policy
explanatory Essay
2298 words
Integration in the EU and Monetary Policy
The creation of the European Union (EU) is a great political and economic feat. For it is the ultimate sign of cooperation between nations that had been in constant rivalry before. Nevertheless, the ideals of such a union cannot stand alone without having a strong foundation and continuos rational decision making by all of the actors involved. If we assume that the European Central Bank’s (ECB) principle role is to guarantee the well-being of all EU members, then policy making becomes a very complex issue since it must consider such a large and diverse area. I believe there needs to be more economic integration between EU countries for monetary [and fiscal] policy of the ECB to be beneficial to all participants.
Even before World War II, the dream of a unified Europe existed. This ideal emerged from the desire to guarantee peace, for a common political and economic system would, in theory, lower the chances of war. This is because by slowly erasing countries’ borders and making them intra-dependent, states are forced to work with each other rather than oppose one another. A unified economy would also turn Europe into one market and increase the continent’s role in the international monetary system. In March of 1979, eight countries officially participated in the European Monetary System (EMS) by pegging their currency to the German mark. By tying their monetary policy to the Bundesbank’s well known monetary targeting policy, they were able to import German credibility to reduce their own inflation. Indeed, EMS members considerably reduced their inflation by exchange-rate targeting, making Germany the anchor country. France reduced inflation from about 5% in 1987 to 2% ...
... middle of paper ...
...onomies with the rest of the EU members.
[1] Aksoy, Yunus, Paul De Grauwe, and Hans Dewachter. “Do Asymmetries Matter for European Monetary Policy?” University of Leuven: Center for Economic Studies. April 2002
It is clearly beneficial for the well-being of the EU for there to be greater cooperation between members. If borders truly want to be erased, intra-EU trade and labor mobility needs to increase substantially. Also, fiscal policy needs to be increasingly coordinated so the European government can use it as a tool. Although, with enough fiscal room granted to individual countries so they can use it against domestic shocks. In conclusion, political and economic integration should be the ultimate goals of the EU, because by making Europe more uniform, at least in numerical terms, ECB policies will be most effective and beneficial for each country.
In this essay, the author
- Opines that the creation of the european union (eu) is a great political and economic feat. it is the ultimate sign of cooperation between nations that had been in constant rivalry.
- Explains that the dream of a unified europe emerged from the desire to guarantee peace.
- States that mishkin, frederic s., the economics of money, banking, and financial markets, sixth edition.
- Opines that the creation of the european union (eu) is a great political and economic feat. it is the ultimate sign of cooperation between nations that had been in constant rivalry.
- Explains that the dream of a unified europe emerged from the desire to guarantee peace.
- States that mishkin, frederic s., the economics of money, banking, and financial markets, sixth edition.
- Explains krugman, paul and obstfeld, maurice. international economics. reading, mass.: addison wesley longman.
- Explains that the maastricht treaty of 1991 set macroeconomic goals, or convergence requirements, for the countries to follow.
- Explains that the "eurosystem" refers to the ecb and the fifteen national central banks (ncbs) of eu members.
- Explains krugman, paul and obstfeld, maurice. international economics. reading, mass.
- Explains that it is necessary to measure the costs and benefits of joining a fixed exchange rate, which is related to how well integrated economies are and the "monetary efficiency gain for the joining country."
- Explains van aarle, bas, engwerda, and plasmanas's "monetary and fiscal policy interaction in the emu: a dynamic game approach."
- Explains that the labor market is one of the least flexible inputs needed for economic integration in europe.
- Explains that there has been a considerate increase in capital migration within the eu because of the removal of previews capital movement restrictions.
- Cites the economist's "survey: european business and the euro - work in progress".
- Cites belaisch, agnes, laura kodres, joaquim levy, and angel ubide. "euro-area banking at the crossroads" international monetary fund.
- Explains that in the eu, fiscal policy is not centralized, rather it is decided within each country individually.
- Explains cangiano, marco, and eric mottu's "will fiscal policy be effective under emu?" international monetary fund.
- Analyzes how a study by the bank of italy found that national information, rather than only area-wide variables, improves monetary policy decisions.
- Describes angelini, paolo, del giovane and terlizzase, saniele. "monetary policy rules for the area:
- Explains that a study by the university of leuven addresses the issue of divergent interests between countries and the decision-making process when determining monetary policy at the ecb.
- Cites aksoy, yunus, paul de grauwe, and hans dewachter. "do asymmetries matter for european monetary policy?"
- Concludes that political and economic integration should be the ultimate goals of the eu.
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- Explains that automobiles are an adaptable technology that has been improved to keep passengers happy and safe. air pollution and rising gasoline prices have forced the industry to make improvements.
- Explains that the invention of the modern automobile has had a tremendous impact on society. the internet is used by nearly everyone in the u.s.
- Analyzes the pros and cons of the modern automobile, stating that it has had a large impact on society.
1408 wordsRead More - Macroeconomic flaws in the Euroopinion essayFive years ago, the biggest thing in economic and international news was the introduction of the new European currency, the Euro, into circulation and into the pockets of the consumers of the participating countries within the European Monetary Union. In an attempt to unite Europe and to form a dominant currency to rival the US dollar, Europe locked their exchange rates and went full steam with this plan. Unfortunately, for many of the European countries, what seemed to be the end all for European economics, quickly unraveled the inherent reality of the fundamental macroeconomic flaws in the European monetary system that may cause its downfall and deficit policy that could lead to its utter collapse. Even with this in mind, some speculate that, with the right amount of revision and monitoring, the Euro might actually have a chance of becoming the worlds leading currency. In any cases, however, before looking this far into the future, we must first remember the past.
In this essay, the author
- Analyzes the fundamental macroeconomic flaws in the european monetary system that may cause its downfall and deficit policy that could lead to its collapse.
- Explains that europe and all of its continental borders have disagreed, argued, and fought wars over disputing issues, differing cultures and the occasional expansionist fascist. this has hindered the coming together and agreeing upon common goals for europe to grow and thrive as an economic contender.
- Explains that europe has seen many steps taken to unify europe since the post-war years. the european union has been a crucial step and huge driving force in the thought process behind the euro itself.
- Analyzes the fundamental macroeconomic flaws in the european monetary system that may cause its downfall and deficit policy that could lead to its collapse.
- Explains that europe and all of its continental borders have disagreed, argued, and fought wars over disputing issues, differing cultures and the occasional expansionist fascist. this has hindered the coming together and agreeing upon common goals for europe to grow and thrive as an economic contender.
- Explains that europe has seen many steps taken to unify europe since the post-war years. the european union has been a crucial step and huge driving force in the thought process behind the euro itself.
- Describes the unique characteristics of europe that make it different from any other region in the world.
- Explains that the european union adopted the warner plan and the proposal statement on the prospects of a monetary union in the 1970s.
- Explains that the warren plan stressed the need to move forward simultaneously in coordinating policy, and in narrowing exchange rate margins, the integration of capital markets and the establishment of a common currency.
- Explains that the ems was more of a realistic set plan that laid out how to go about the long road toward integration.
- Explains that five decades after the end of wwii, europe was in the final stage of essentially accomplishing the "unacomplishalble". the european union and its 11 pioneering nations accepted the euro as their new currency.
- Opines that the euro was not just thrown together in a day, it has been worked on since the 70's and has many underlying benefits but there is no free lunch.
- Opines that a monetary union should have an optimal currency area and convergence of the economies of participating countries.
- Explains krugman and obsfel define an optimal currency area as "groups or regions with economies closely linked by trade in goods and services and by factor mobility".
- Explains why europe is not an optimal currency area, even though the united states is one.
- Compares the european union and the us in terms of labor costs, payroll, and profits. people can easily move from one side of the country to the other.
- Opines that the situation in europe is quite different with factors such as language differences, cultural differences and the slow growth of most of europe.
- Explains that the concept of labor market flexibility indicates how fast an adjustment can be made within the labor markets.
- Explains that if workers accept lower wages, employers can maintain the same number of employees, but also pass on the reduction in payroll costs in the form of lower prices. lower prices spur exports and lead domestic consumers to buy fewer imports.
- Explains that the second requirement for the success of the euro monetary system is convergence. convergence establishes what a country needs to enter the european union and the certain things it must do in order to remain in the euro-zone.
- Explains that even if the current economic standards are met in a certain country, it is possible that some business cycles of these countries won't be correlated at all with neighboring countries or with the central bank.
- Explains that when 11 countries enter into an agreement like the euro zone, they were also agreeing to the elimination of their own monetary policy.
- Opines that the central bank for the european monetary union will be unlikely to use expansionary policy to help one country, since doing so would cause inflation in those emu countries not in recession.
- Opines that the central bank's lack of ability to accurately control the regional monetary policy and resulting inflationary rates will plague the union for some time as they try to keep this in control.
- Explains that the second traditional tool in government policy is fiscal policy. although countries involved in the european union do not lose all control and independence of their fiscal policies, the convergence criteria for the euro states that a single country can not have deficits of more than three percent of its gdp.
- Explains that countries are voluntarily giving up traditional tools to control their domestic economy by joining the single currency area. the effects of this have been quite apparent with the deficits of 12 euro zone violating this policy.
- Opines that the purpose of such a policing mechanism seems at first self-evident. budget deficits inflate the economy.
- Explains that the biggest flaw in the system is the failure to recognize the difference between a structural budget and cyclical budget.
- Explains that a cyclical budget deficit is where the country has less than full employment and recessionary characteristics. the remedy is not to raise taxes or cut spending to eliminate the deficit.
- Opines that deficit cure is a recipe for economic stagnation and political turmoil. common currency takes away an individual counties ability to participate in monetary and fiscal policy.
- Opines that for the sake of europe, they hope they get these problems figured out otherwise we could be looking at a major debt default and banking crisis.
2075 wordsRead More - The European Union cooperation all started with economic integration. Since the beginning of the ECSC in 1952 until now one of the major forces but also one of the major weaknesses of the EU has been their will for a common market and a monetary union. The single market was achieved in 1992 with the entrance into function of the Maastricht treaty. This treaty greatly influenced how states would have to deal with external border control and the free movement of the people because what the Maastricht treaty did was not only opening a single market, but also allowing people, goods and services to move freely across European Union member states. Economic integration has explained by Nevin has usually 5 level which goes from he lowest o he highest level of cooperation. The first level of integration is the preferential tariff which only allows st...
In this essay, the author
- Explains how economic integration and the creation of a common market contribute to growing concern about organized crime and how the eu dealt with such problems.
- Explains that the european union's cooperation started with economic integration. the maastricht treaty opened a single market and allowed people, goods and services to move freely across member states.
- Explains that economic integration and liberal ideas are the main reason why the common market exists in the european union.
- Explains how economic integration and the creation of a common market contribute to growing concern about organized crime and how the eu dealt with such problems.
- Explains that the european union's cooperation started with economic integration. the maastricht treaty opened a single market and allowed people, goods and services to move freely across member states.
- Explains that economic integration and liberal ideas are the main reason why the common market exists in the european union.
- Explains neo-functionalism and the spillover hypothesis to explain why there is increasing cooperation and creation of supranational identity deal with issues that arise.
- Explains that the single market allowed a free movement of people but at the same time created an issue about how easy it was now for organized crime to move from one place to another.
919 wordsRead More - Biggie Smalls: The Life Of The Waste Of Peopleexplanatory essayThe album sold 700,000 hard copies and was number one on the Billboard 200 within a week’s time. He didn’t live to put the final touches on the album however, the album was the last thing left before Biggie’s death and perfected every single aspect that rappers go through. “Life After Death” has been acclaimed by many music writers in the industry as “one of the seminal mafioso” rap albums. The album was ranked number 476 on Rolling Stone’s 500 greatest albums of all time in 2003. Most of the tracks on the album were written during the feud with Tupac and the album had a wide variety of songs and a lot of diversity in it. “Life After Death” set the record for the quickest and largest jump in the history of Billboard
In this essay, the author
- Explains that the notorious b.i.g was an extremely talented rapper and person. christopher wallace, aka biggie smalls, was one of the most respected and successful artists worldwide.
- Explains that biggie smalls was the son of jamaican parents, violetta wallace and george latore. he dropped out of high school at the age of seventeen and became a crack dealer.
- Explains that biggie's biggest inspirations were ll cool j and big daddy kane, who worked hard on what they were passionate about and worked for the lifestyle he desired to live.
- Explains that the notorious b.i.g was an extremely talented rapper and person. christopher wallace, aka biggie smalls, was one of the most respected and successful artists worldwide.
- Explains that biggie smalls was the son of jamaican parents, violetta wallace and george latore. he dropped out of high school at the age of seventeen and became a crack dealer.
- Explains that biggie's biggest inspirations were ll cool j and big daddy kane, who worked hard on what they were passionate about and worked for the lifestyle he desired to live.
- Explains that christopher wallace nicknamed himself biggie due to his weight. he was known for not being attractive but a charmer.
- Explains that biggie started a group called junior masters at finding intelligent attitudes, which consisted of artists such as lil kim, cease, d-roc, and more talented and respectable artists of this time.
- Narrates how biggie's relationship with tupac shakur turned sour in 1994, when he was robbed of $40,000 worth of jewelry and shot five times.
- Explains how the west side vs the east side became known as the feud between the east and west coasts. tupac released a song titled, "hit ‘em up," directed at biggie.
- Explains that biggie was shot and killed on march 9th, 1997. the album "life after death" was acclaimed as one of the seminal mafioso rap albums of all time.
1787 wordsRead More - Is the European Monetary Union a disaster? ? Discussanalytical essayFor over thirty years now a European Monetary Union has belonged to the articulated aims of the European Union. All previous attempt to establish a Monetary Union, such as the so-called “Werner- Plans” in 1979 through the European Monetary System (EMS), failed though. In 2002 the EMU finally was put into full effect. Now that the Euro- countries have experienced three years with the Euro, it is possible to make a preliminary assessment of the Euro.
In this essay, the author
- Evaluates the development of the emu, a system that only came into effect three years ago.
- Analyzes how the essay illustrates why the emu did not reach their targeted goals immediately and points out shortcomings in the maastricht treaty that should be reformed.
- Explains that a european monetary union has been part of the european union's aims for over thirty years. the emu was put into full effect in 2002.
- Evaluates the development of the emu, a system that only came into effect three years ago.
- Analyzes how the essay illustrates why the emu did not reach their targeted goals immediately and points out shortcomings in the maastricht treaty that should be reformed.
- Explains that a european monetary union has been part of the european union's aims for over thirty years. the emu was put into full effect in 2002.
- Explains that the oxford dictionary defines the term ‘disaster’ as a ‘complete failure’. they outline the intentions for the introduction of the euro and the advantages economist and member states had hoped to gain from it.
- Explains that the treaties of rome, which established the european economic community in 1957, were the cornerstones for the coherent currency.
- Opines that the benefits of a single currency include no distortion in production and investments through exchange rate fluctuations.
- Argues that the emu will cause the eu's greatest setback in history. the monetary union does not emerge simultaneously with a political union.
- Opines that a strong euro would cheapen the eu's imports, whereas weaker currencies would lower prices of european exports and make european goods more competitive.
- Explains that the ecb defines price stability as a year-on-year increase in the harmonised index of consumer prices for the euro area.
- Explains that the euro-area's economic growth performance has been unsatisfactory, with growth rates ranging from 3% in italy and germany to 10% in ireland.
- Analyzes how the euro declined steadily since 1995, but in 2002, the rate began to increase again. the exchange rate course of 2003 has recovered some of euro's former depresiion but still has its flaws.
- Explains that the sgp highlighted the politicised nature of the emu, as both france and germany saw it as an opportunity to demonstrate their hegemony.
- Analyzes whether the maastricht treaty is aim and function adequate.
- Argues that the european central bank, as a new institution created by the maastricht treaty, takes the coordinating role of this economic and monetary union.
- Explains that the ecb governing council has repeatedly had to contend with the accusation of a lack of transparency. the two-pillar strategy makes heavy demands on the euro system's communication policy.
- Explains that the ecb council follows a two-pillar strategy and judges inflation expectations over the medium term.
- Opines that the introduction of the euro has had far-reaching implications for the financial markets. however, a complete integration of financial systems is still hindered by regulatory, tax and legal obstacles.
- Explains how the 2002 cash changeover worked without a hitch, with banks supplied with notes and coins in advance, and banks in return supplied the retailers with new cash.
- Explains that the hicp does not cover a broad basket of goods. the changeover had given rise to fears of inflation.
- Opines that the outlook for emu in the medium term depends first and foremost on the enlargement process and the union's ability to cope with it.
- Analyzes how hankel argues that the test case poland shows how the monetary union without balance mechanisms as exchange rates and transfer services in an disintegrated, through national tariff systems as culture and language borders, compartmentalised, and labour market works.
- Opines that the emu has enhanced in terms of political and foreign policy, as the euro-area countries are forced to communicate even in an economic basis.
- Argues that the emu is not without problems, but it isn't a disaster in the sense of failure. its success is yet to be determined.
- Explains pearsall, j., the concise oxford dictionary, oxford university press.
- Opines that the euro-illusion, ist europa noch zu retten? rowohlt taschenbuch verlag, hamburg.
- Explains the european economic- and währungsunion between anspruch and wirklichkeit, peter lang, frankfurt.
3420 wordsRead More