EMU started with eleven member countries as scheduled on January 1, 1999. The paper shows that the primacy of politics over economics in this decision could have serious consequences concerning the stability of EMU in the transition phase. Speculative attacks against currencies which are in...

This paper discusses whether European Monetary Union (EMU) will promote labor-market reforms. Labor-market reforms carry a double dividend: not only structural unemployment but also equilibrium inflation is decreased. However, with labor-market reforms being implemented nationally, the latter...

This paper explores the puzzling inaction of governments in Europe concerning labor market liberalization. Although a more liberalized labor market is a prerequisite for mitigating mass unemployment, very little in terms of actual reforms has been achieved. This puzzle can be solved by adopting...

The literature on unemployment has mostly focused on labor market issues while the impact of capital formation is largely neglected. Job creation is often thought to be a matter of encouraging more employment on a given capital stock. In contrast, this paper explicitly deals with the long-run...