The Economic and Business Consequences of the EMU A Challenge for Governments, Financial Institutions and Firms Hubert Ooghe Conference Chairman, Vlerick Leuven Gent Management School alld Ghent University EMU finally got under way on 1 st January 1999. Since then 11 European countries share a common currency, the Euro, and pursue a common monetary policy managed by the European Central Bank (ECB). After forty years of economic integration, Euroland has the wherewithal with which to enter the 21 st century. However monetary union has implications for nearly all areas of economic activity and decision-making. Throughout the academic world researchers are fully occupied with the theoretical analysis of the impact of the Euro and the effects of incorporating the new operational framework into their economic models. Businesses and government departments are concerned primarily with the practical implementation of the single currency. For all those who playa part in the economy, it is a question of making the most of the macro and micro economic opportunities offered by the Euro and minimising any threats. On 17th and 18th March 2000, after the EMU and Euro were in operation for one year, an international conference was held in Ghent (Belgium) on the economic consequences of the introduction of the EMU and the Euro for governments, financial institutions and firms.

This book is based on the conference "EMU and the Outside World", held at the Swiss Federal Institute of Technology (ETH), December 11, 1998. The conference was organized by the Swiss Institute for Business Cycle Research (KOF), which is supported jointly by the ETH and the Swiss Society for Business Cycle Research (SGK), an organization comprising representatives from private industry, the Swiss National Bank and public authorities. On the eve of the final stage of European Economic and Mone tary Union (EMU), Zurich seemed to be a particularly appropriate place for such a conference. On the one hand, given its location and economic and financial links with the euro area, Switzerland is one of the "outside coun tries" most affected by EMU. On the other hand, it was nowhere else than in Zurich where the vision of "a United States of Europe" was expressed for the first time by Winston Churchill in his speech on September 19, 1946. For many EMU is a step in that direction, whether welcome or not. Most of the papers appearing in this volume were presented at the con ference and have been revised and updated. Three contributions, chapter 11- 13, were commissioned specially for this publication. Besides the authors of the chapters, special thanks are due to Guido Boller, Robert McCauley, Umberto Schwarz, and Charles Wyplosz.

This paper assesses the implications of EMU for world macroeconomic and financial stability. After reviewing the predictions made by the literature, it looks at the evidence of the first ten years of EMU. In so doing, it distinguishes the effect of EMU from global factors at work since the 1980s, often referred to as zthe Great Moderationy. The paper concludes that EMU is on the whole having a stabilising effect on the world economy, particularly in neighbouring countries. By helping to stabilise interest rates, inflation and GDP growth in the euro area, EMU has contributed to greater stability of those variables in other advanced countries. There is also evidence that EMU is facilitating international risk sharing and consumption smoothing. Predictions that EMU would increase exchange rate volatility are, in general, not confirmed by the data. However, the amplitude of mediumterm exchange rate swings has increased for some currency pairs. Moreover, there is little evidence so far that EMU has facilitated international policy coordination, partly reflecting the still fragmented representation of the euro area in multilateral fora. -- EU Bookshop.

The European Monetary Union (EMU) got under way on 1 January 1999. Since then 11 European countries share a common currency, the Euro, and pursue a common monetary policy managed by the European Central Bank (ECB). After forty years of economic integration, Europe has the wherewithal with which to enter the 21st century. However monetary union has implications for nearly all areas of economic activity and decision-making. Throughout the academic world researchers are fully occupied with the theoretical analysis of the impact of the Euro and the effects of incorporating the new operational framework into their economic models. Businesses and government departments are concerned primarily with the practical implementation of the single currency. For all those who play a part in the economy, it is a question of making the most of the macro and microeconomic opportunities offered by the Euro and minimizing any threats. The Economic and Business Consequences of the EMU describes the economic consequences of the introduction of the EMU and the Euro for governments, financial institutions and firms. The volume, s aims are threefold: To make a first assessment after about a year=s experience with Economic and Monetary Union; To examine the impact of EMU and the introduction of the Euro in various areas of economic policy, involving both government and the corporate sector including the banking industry; To provide an insight into the challenges that the Euro offers for the coming years with respect both to macro-economic policy and the development of the financial markets and with respect to business management.

This paper presents a methodology to analyze the responsiveness of fiscal sustainability to the “endogenous fiscal discipline” that will be strengthened by the EMU. This discipline arises in response to the harmonization of tax systems, the loss of control of current and prospective money financing, and the deepening of financial market-based discipline. The model used in this paper is a generalization of Blanchard’s (1984) model, in which the interest rate is determined endogenously. This provides the framework to analyze more features of the linkage between sustainability and endogenous fiscal discipline. This paper also presents a new intratemporal fiscal sustainability index.

This book, edited by Paul R. Masson, Thomas Krueger, and Bart G. Turtelboom, contains the proceedings of the seminar held in Washington, D.C. on March 17-18, 1997, cosponsored by the IMF and Fondation Camille Gutt. Conference participants discussed implications of European Economic and Monetary Union (EMU) on exchange and financial markets, and consequently on the activities of market participants and private and official institutions. The five main themes of the seminar were the characteristics of the euro and its potential role as an international currency; EMU and international policy coordination; EMU and the relationship between the IMF and its EMU members; lessons of European monetary integration for the international monetary system; and the transitioin to EMU.

The current members of the European Union (EU) are becoming increasingly integrated from an economic and financial standpoint. In the coming years, some EU members may also establish the European Economic and Monetary Union (EMU) and adopt a common single currency, the euro. While integration was deepening, the fiscal performance of most EU members gradually deteriorated leading to higher, albeit uneven, public indebtedness. How could the EMU affect the public finances of the participating countries?

The prosperity and stability of any economic structure is reliant upon a foundation of secure systems that regulate the movement of money across the globe. These structures have become an integral part of contemporary society by reducing monetary risk and increasing financial security. Regaining Global Stability After the Financial Crisis is a critical scholarly publication that examines the after-effects of the economic slowdown and the steps that have been taken to overcome the consequences of the slowdown as well as strategies to reduce its impact on economies and societies. Highlighting a wide range of topics including economic convergence, risk management, and public policy for financial stability, this book is geared toward academicians, practitioners, students, managers, and professionals in the financial sector seeking current research on regaining a sense of safety and security after a time of economic crisis.