Optimal Currency Area and European Monetary Membership: Economics and Political Economy

34 Pages Posted: 6 Sep 2017 Last revised: 21 Dec 2017

See all articles by Donato Masciandaro

Donato Masciandaro

Bocconi University - Department of Economics (ECO); Bocconi University - Department of Economics

Davide Romelli

Trinity College (Dublin) - Department of Economics; Trinity College (Dublin)

Date Written: September 4, 2017

Abstract

The recent Global Crisis are posing challenges to the stability of the European Monetary Integration process. The pillar of the European Monetary Integration is the evolution of the European Monetary Union (EMU). Being the EMU the establishment of a currency union, such as international agreement implies for the member countries the inability to use exchange rates and national monetary policy to deal with real and financial shocks. It is natural then to wonder under which conditions the net benefits of a currency union are likely to be positive, comparing the above mentioned limitations with the medium long term gains in having on the one side perpetual fixed exchange rates and on the other side the delegation of the monetary policy action to an independent and supranational central bank, i.e. the European Central Bank (ECB) that manages the European Monetary Union (EMU). A natural question arises: how to evaluate the economic pros and cons in having the EMU membership? The aim of this paper is to analyse the economics and the political economy of the EMU membership.

Keywords: OPTIMAL CURRENCY AREA, EUROPEAN MONETARY INTEGRATION, MONETARY POLICY, POLITICAL ECONOMICS

JEL Classification: E52, E58, E03

Suggested Citation

Masciandaro, Donato and Masciandaro, Donato and Romelli, Davide, Optimal Currency Area and European Monetary Membership: Economics and Political Economy (September 4, 2017). Bocconi Legal Studies Research Paper No. 2017-60, Available at SSRN: https://ssrn.com/abstract=3031786 or http://dx.doi.org/10.2139/ssrn.3031786

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics (ECO) ( email )

Via G. Roentgen 1 - 5E211
20136 Milan
Italy

Bocconi University - Department of Economics ( email )

Via G. Roentgen 1 - 5E211
20136 Milan
Italy

Davide Romelli

Trinity College (Dublin) - Department of Economics ( email )

Arts Building
Room 3014
Dublin
Ireland

Trinity College (Dublin) ( email )

2-3 College Green
Dublin, Leinster D2
Ireland

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