Life on the outside: economic conditions and prospects outside euroland

The paper looks at the performance of European member states since the Global Financial crisis. It addresses political as well as economic issues. The dramatic impact of sustained austerity is documented. The paper also provides a new methodology for estimating competitiveness and Equilibrium wages in Europe.

2014

The creation of the European Monetary Union (EMU) created the conditions for increased trade and economic growth for the member countries. The initial hypothesis regarding the impact of euro launch in terms of Foreign Direct Investment (FDI) inflows was that monetary integration will affect positively the FDI. The aim of this paper is to construct and test a model explaining the intra-EMU FDI position of various EMU countries on the basis of their location advantages during 1985-2011 period. The model consists of variables approximating location advantages as these are suggested by economic theory and empirical research like market size, labor cost, openness, technology, interest rate and introduction of the Euro. The model focuses on the impact of EMU on FDI inflows and indicates that the monetary union has no significant impact on FDI inflows across individual member countries. The European market integration degraded the motives for market seeking FDI. Individual markets are now ...

2002

Most probable scenario: EMU membership enhances the stability of the UK economy as a result of reduced exchange rate uncertainty. Investment is encouraged, productivity is boosted, trade linkages are strengthened, and competition is increased.

SPOUDAI Journal of Economics and Business, 2012

The aim of this paper is to construct and test a model explaining the inward Foreign Direct Investment (FDI) position of various members of European Monetary Union (EMU), on the basis of their location advantages during 1980-2010 period. The model focuses on the impact of EMU on FDI inflows and indicates that the monetary union has differentiated impact on FDI inflows across individual member countries. Euro zone membership is statistically significant but a negative determinant in the cases of Greece, Portugal, France, Belgium and Spain. Furthermore, for both Germany and Ireland the Euro area membership is a negative but statistically insignificant FDI inflow factor, while in the cases of Netherlands and Finland it is positive but also statistically insignificant. The results imply that countries with low competitiveness have not gained from the entrance in European Monetary Union, in terms of Foreign Direct Investment inflows.

C. Deissenberg, R..F. Owen and D. Ulph eds., European Economic Integration, supplement to the Review of International Economics 5(4), 10-35, 1997

Differential requirements for seigniorage provide a weak case for retaining monetary independence. As regards adjustment to asymmetric shocks, nominal exchange rate flexibility is at best a limited blessing and at worst a limited curse. Absence of significant fiscal redistribution mechanisms among EU members is not an obstacle to monetary union. Neither is limited international labour mobility. Convergence of real economic performance is irrelevant for monetary union. A common currency is the logical implication of unrestricted capital mobility. The Maastricht criteria need not hinder monetary union provided the political will exists to adopt a flexible interpretation of the fiscal criteria.

Economic Policy, 2003

In this paper we estimate the early effect of the European Monetary Union (EMU) on trade. We use a panel data set that includes the most recent information on bilateral trade for 22 developed countries from 1980 through 2001. During this period 12 European countries formally entered into a currency union. This is a unique event that allows us to study the effect of currency union on trade among a relatively homogenous group of industrial countries. Controlling for a host of other factors, we find that a pair of countries which joined the EMU experienced an increase in trade between 12 and 19 percent, depending on the sample. Our estimate is much smaller than that in Glick and Rose , who study a similar problem using a completely different sample, in which currency unions are formed mainly by very small and poor countries. However, the effect of EMU on trade is significant, and economically important, particularly if we consider that our sample only covers the first three years of the EMU, a period in which the Euro did not even circulate. + email: alejandromi@iadb.org, ernestos@iadb.org and guillermoo@iadb.org . * We thank Ernesto López-Cordova, Ugo Panizza and Andy Rose for useful comments and suggestions, and Daniel Leigh for excellent research assistance. We are also grateful to Andy Rose for sharing his data.. The opinions in this paper reflect those of the authors and not necessarily those of the IADB.

The UK's departure from the European Union (EU) will profoundly affect European integration. Although many have lamented the blow that this presents to the EU, Brexit also presents a window of opportunity for it to consider its reform options after the UK's exit, including policies related to Economic and Monetary Union (EMU). Although the UK famously declined participation in EMU and retained the pound as its currency, this policy brief argues that Brexit will affect the future trajectory of EMU in several ways. First, it will place pressure on euro-outs to adopt the euro as their currency. Second, it will alter existing alliances within the EU, including between the euro-ins and euro-outs. Third, Brexit will prompt changes in EU legislation to account for the departure of the UK, thus opening the door to reforms to strengthen European financial market integration and possibly even fiscal cooperation.

1997

For a long time European Economic and Monetary Union was mainly considered an internal European issue and external consequences were largely ignored. In contrast to most previous analyses, this paper looks at a number of international implications of monetary union. It is argued that several factors could contribute to the euro becoming an international currency in the future and a

"Is is more than 50 years since the process of European integration began, constituing an area of economic and political stability. At the end of the past century the monetary integration as the last stage of integration process has taken place and has become a natural consequence of single market establishment. The aim of the paper is to analyse and summarize the role which euro has played in the process of integration in Europe, paying special attention to the benefits flowing from introducing single currency. The first part of the paper describes changes in economic and financial environment of the euro area and presents some examples of evidence that Euro area economies are gradually becoming more interdependent. A brief literature survey, particularly focused on an impact of euro on intra- and extra-euro area trade, foreign direct investment and financial markets is being made. The second part of the paper discusses the single currency impact on completion of the single European market and as a consequence forceful contribution to more integration. The attempt is made to show challenges that lie ahead for the single currency, particularly financial crisis, economic integration and future enlargement. The article takes up and open a discussion on challenges on the road from European Union to euro area membership both for current and prospective euro area members."

2017

The history of European integration has been characterized by several “stops-and-goes” with considerable support on political grounds. In this chapter, we discuss the role of European integration for the future of the EU–UK relations. Integration, consistent with the idea of “completing” the European Monetary Union (hence, a “Genuine Economic and Monetary Union”—GEMU), will have the obvious consequence of affecting the UK as well and the future of its negotiations with the EU. Provided that European integration worked in the past, the net benefits of staying out of the EU ex ante may be different from the same benefits ex post, particularly in the likely scenario the Union will have to “comprehensively” move towards a GEMU to safeguard its integrity.