On January 1, 1999, 11 European countries will officially become a monetary union with one currency, the euro. Forming a monetary union brings benefits, such as increased trade between countries. But it carries costs as well. To join the union, each country must cede its right to set individual...

The Maastricht Treaty imposes constraints on fiscal policy that will last beyond the formation of EMU. However, the fiscal requirements are determined in an ad hoc way, and do not consider the position of the countries in the business cycle, nor the medium-term planning horizons of the...

The recurrent crises in the EMS have bolstered a lively debate about the transition to EMU. Indeed the political economy of regional integration is at odds with the theory of optimum currency areas. Essentially static and based on real criteria alone, the latter is not suited to deal with a...