1 Introduction -- 2 Econometric Modelling -- 3 Autoregressive Probability Models -- 4 Structural ECM Models -- 5 Aggregation -- 6 Empirical Money Demand -- 7 Conclusions -- A Technical Appendix -- A.1 Expansion of Polynomials -- A.2 Granger Representation Theorem -- A.3 Concentration of...

This work examines the political economy of exchange-rate policies in the eastward expansion of the eurozone. Analysis shows that prospective members of the EMU are likely to pass on some costs of convergence to the current EMU members. The mechanism is an altered exchange-rate policy that...