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Atlantic
Economic Journal |
4949 West Pine Blvd.
Second Floor
St. Louis, MO 63108-1431 USA Phone: (314) 454-0100 Fax: (314) 454-9109 |
| VOLUME 30 |
SEPTEMBER
2002
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NUMBER 3
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E-Mail: iaes@iaes.org
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| Table of Contents | Submission | Manuscript Instructions | Anthology Instructions | Membership | Web Founders | Endowment Fund | IAES Officers | Front Page | |||
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The Eurosystem established a single monetary policy and
has the three guiding principles of independence, transparency, and decentralization.
These three principles helped to successfully formulate and implement
the euro on 1 January 2002. Major criticisms against establishment of
the euro failed to come true and, in fact, the euro has quickly become
a major currency in the world. Challenges facing continued success of
the euro include structural reforms, financial stability, and the accession
of new members to the EU and EMU.; Atlantic Econ. J., 30(3): pp. 225-35,
Sept. 02. ŠAll Rights Reserved
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The author analyzes the likely impact of EMU and the associated
changes in the monetary, economic, and institutional environment on European
labor markets in an open economy model. He shows that in this model, the
formation of a monetary union (MU) has no effect on unemployment if the
participating countries were part of a fixed exchange rate regime before
entering the MU and if the monetary policy of the common central bank
resembles that of the former anchor bank. In addition, he discusses various
cases in which this conclusion does not hold and where one can expect
an impact of EMU on structural unemployment. (JEL E50, E58, F41, F42,
J51); Atlantic Econ. J., 30(3): pp. 244-62, Sept. 02. ŠAll Rights Reserved
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This paper analyzes the possible consequences of diverging
economic developments within the euro area, given the current decision-making
process of the European Central Bank (ECB). For the German Bundesbank,
the role model of the ECB, there is evidence that differences in the economic
situation in the various states affected voting behavior in the Governing
Council. For the euro area countries, the paper finds that, despite convergence,
important differences in terms of economic performance and preferences
remain. As all national central banks have one vote within the Governing
Council of the ECB, there is a risk that national considerations may prevail
over EMU-wide considerations. (JEL D72, E58); Atlantic Econ. J., 30(3):
pp. 263-82, Sept. 02. ŠAll Rights Reserved.
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This paper studies the monetary policy in the euro area.
An important question concerning the euro area is whether the monetary
policy has been too tight in the 1990s and in turn, caused the high unemployment
rates, in contrast to the economic prosperity and low unemployment rate
of the U.S. Therefore, the authors explore what would have happened to
the euro economy if the Central Banks had followed either the fixed or
time-varying monetary policy rule of the U.S. The paper does find that
the European central banks and then later the ECB overreacted to past
inflation pressures. (JEL E17); Atlantic Econ. J., 30(3): pp. 283-97,
Sept. 02. ŠAll Rights Reserved
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Overall, the ECB managed monetary policy quite satisfactorily
in the first phase of EMU. Nevertheless, this paper asks whether monetary
policy could not have been improved. In the last three years, Euroland
was confronted with the first external shock. Oil prices increased considerably,
leading to an increase of headline inflation of over one percentage point
in 2000-01. With a specific Taylor rule one can very well understand,
how the ECB sets interest rates, but it turns out that monetary policy
based on the estimated Taylor reaction function was rather backward than
forward looking. While it reacted with a lag to the actions of the U.S.
Fed, it was overly cautious by targeting total HICP inflation. Here it
is strongly argued and also demonstrated with model simulations that a
monetary policy oriented towards core inflation would have resulted in
a much better economic performance. The business cycle downturn could
have been mitigated with no additional inflation risks.(JEL E5, E52, E58,
E47); Atlantic Econ. J., 30(3): pp. 298-319, Sept. 02. ŠAll Rights Reserved
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The German Stability Program: A Quantitative Assessment KLAUS WEYERSTRASS
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In the Maastricht Treaty and the European Stability and Growth Pact, it was recognized that high public deficits and debt levels would endanger the success of the European Economic and Monetary Union. In its stability program, updated in December 2001, the German government published its objective to achieve a balanced general budget in the year 2004. The budget of the central government should be balanced in 2006 [Bundesfinanzministerium, 2001]. This paper analyzes the effects of strict budget consolidation policies on important macroeconomic variables like inflation, unemployment and GDP growth. It is shown that a balanced budget as early as 2004 would necessitate high public consumption and investment. These should be financed by higher indirect taxes, whereas social security contribution rates should be reduced to bring unemployment down. (JEL C53, E62, H62); Atlantic Econ. J., 30(3): pp. 320-34, Sept. 02. ŠAll Rights Reserved |
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ANDREW HUGHES HALLETT |
| Britain's possible entry into the Eurozone has proved highly controversial, both on economic and political grounds. The British government has set up a series of tests to be satisfied before entry. Besides being vaguely defined, these tests are time dependent. This paper attempts to evaluate the case for British entry on more general Optimal Currency Area criteria, and argues that the failure of some of these criteria would provide a logical explanation of the British reluctance to join. (JEL E61, F02, F42); Atlantic Econ. J., 30(3): pp. 335-48, Sept. 02. ŠAll Rights Reserved |
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