The ‘Stability Pact’ agreed at the Dublin Summit in December 1996 and concluded at the Amsterdam European Council in June 1997 prescribes sanctions for countries that breach the Maastricht deficit ceiling in stage three of European Monetary Union. This paper explores possible motivations for...

This paper reviews the history, economic rationale and main components of the project of establishing a monetary union in Europe by 1999. The adoption of a single currency is shown to be the best available option following the liberalization of capital movements. Much of the institutional design...

This article investigates the impact on economic performance of the timing of moves in a policy game between the government and the central bank for a government with both distributional and stabilization objectives. It is shown that both inflation and income inequality are reduced without...

The main issue in the early years of EMU is one of credibility. On one hand, high exposure to asymmetric shocks and low adaptability (be it in terms of stabilization or adjustment) to both symmetric and asymmetric shocks make the early years of EMU potentially problematic. On the other hand,...

This paper illustrates some of the most important insights of the literature on international fiscal and monetary policy coordination. It notes that the analysis of international policy interactions is enriched by taking the incentives in the domestic policy process into account. These...

This Paper, a thorough revision of Spagnolo (1996), addresses the following questions: What is the optimal design for a set of self-enforcing international policy agreements? How many and which issues should each agreement regulate? Are GATT’s constraints on issue linkage (cross-retaliation)...

Recent research in contract theory views ownership as a substitute for complete contracts. In this paper this approach is applied to monetary integration. Countries face a coordination problem when conducting monetary policy: negative spillovers ensure uncoordinated policy generates too high...

Policy-makers’ incentives to undertake costly reform depends on the international monetary system. We consider the effect of monetary regimes on labour market reform. We find international negotiation of monetary policy produces less reform than non-cooperation. Reform is lowest of all with...

This Paper contributes ideas and analysis to the ongoing EU reform debate. It consists of three distinct parts: voting in the Council of Ministers, restructuring the ECB's Governing Council, and the setting of enlargement “examination” dates. The IGC currently focuses on Council voting,...

This paper investigates the importance of fiscal policy in providing macroeconomic stabilisation in a monetary union. We use a microfounded New Keynesian model of a monetary union which incorporates persistence in inflation and non-Ricardian consumers, and derive optimal simple rules for fiscal...