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This paper examines the behavior of internal price ratios and bilateral real exchange rates of a group of four new EU member states-Estonia, Hungary, Slovakia, and Slovenia. We employ a dynamic ordinary least squares panel estimator to investigate the relative importance of demand and supply influences on the internal and external exchange rates of these countries. Our analysis shows that both supply- and demand-side effects are important, though supply-side effects dominate. The paper also examines the role that administrated or regulated prices and the productivity of the distribution sector play in real exchange rate dynamics. We show that administrated prices have been a powerful force behind price and real exchange developments for our group of accession countries. [ABSTRACT FROM AUTHOR]

Political economists have raised concerns that EMU's asymmetric institutional design leaves the project's legitimacy vulnerable to fluctuations in the perceived advantages and disadvantages of the euro. The evidence presented in this paper suggests that overall support for EMU within the euro area remained high over the period 1999-2005, thus allaying concerns over the project's legitimacy. At the same time, public attitudes towards EMU did vary from one euro-area member to another with perceived rather than actual economic performance appearing to be an important factor behind this cross-country variation. In policy terms, these findings underline the need for a system of euro-area economic governance that promotes a high degree of support for the single currency over the long-term. This will necessitate a more effective approach to output legitimation as well as policies that seek legitimacy for EMU by emphasising process, values and inputs. [ABSTRACT FROM AUTHOR]

This article analyses the December 2002 reform of decision making in the European Central Bank's (ECB) Governing Council in terms of national economy size reflected in the bargaining power of the ECB Governing Council members and member state macroeconomic interest. The National Central Bank (NCB) governors of the largest member states were concerned about the impact upon ECB monetary policy making of equal representation being extended to future member states. By eliminating equal voting rights, the reform distorts the meaning of equality, representativeness and ad personam participation as guiding principles of ECB decision making, moving from equal member state representation towards an emphasis placed upon Euro-zone economy representation. At the same time, two possible concerns watered down efforts to modify 'representativeness' and prevent enlargement contributing to inefficiency in Governing Council decision making. First, the current smaller member state NCB governors opposed a significant reduction of their 'voice' in ECB monetary policy making. Second, legitimacy concerns ensured persistent support for the maintenance of a large and 'decentralised' Governing Council. [ABSTRACT FROM AUTHOR]

Should Europe imitate the U.S. economic model? This European economist answers with a definitive no. The idea of Europe is alive and well, but it requires serious public investment. [ABSTRACT FROM AUTHOR]

How will enlargement of the European Union (EU) affect prospects for the euro as an international currency? Previously, I have argued that Europe's joint currency is fated to remain a distant second to America's greenback long into the foreseeable future because of three structural factors - relatively high transactions costs, due to inefficiencies in Europe's financial markets; a serious anti-growth bias built into the institutions of Economic and Monetary Union (EMU); and, most importantly, ambiguities at the heart of the monetary union's governance structure. In this essay I extend my earlier analysis, focusing in particular on the impact of enlargement on the governance structure of EMU. From the start, internationalization of the euro has been retarded by a lack of clarity about the delegation of monetary authority among governments and EU institutions. The addition of a diverse collection of new members, with significantly different interests and priorities, can only make the challenge of governance worse, exacerbating ambiguity at the expense of transparency and accountability. Enlargement will diminish, not expand, the euro's attractiveness as a rival to the greenback. [ABSTRACT FROM AUTHOR]

This article examines the consequences of the political 'incompleteness' of the monetary union for the democratic accountability of its external monetary policy, comparing the euro area to the United States. In most countries, exchange-rate policymaking is substantially delegated to the finance ministry and central bank; oversight by other domestic actors is relatively weak. While this is true of the United States, the role of the Congress provides the possibility for 'democratic override' when policy diverges substantially from the preferences of a broad set of private sector interests. Europe's monetary union, by contrast, lacks such a mechanism; no institution can provide an effective check on the policies pursued by the core actors, the ECB and Eurogroup. A comparison of the postures of the United States and euro area toward Chinese exchange rate policy suggests that these institutional differences affect policy outcomes. [ABSTRACT FROM AUTHOR]

Proposed and actual reforms to the European Union (EU) Stability and Growth Pact commonly retain the Pact's deficit and debt targets. The American experience with similar macrobudgetary rules suggests that deficit targets may actually act as an incentive for political leaders to engage in noncompliant behavior. If targets were revised to budgetary objectives that politicians could achieve more easily and claim credit for accomplishing, compliance with the new macrobudgetary rules might be increased. [ABSTRACT FROM AUTHOR]

We measure the contribution of the main factors explaining real domestic income growth in eight new EU countries. Our concept of real domestic income differs from real gross domestic product (GDP) by treating changes in the prices of goods traded internationally as a real effect to income growth. Our estimates show that three countries experience a strong increase in their terms of trade, indicating that real GDP growth underestimates the increase in real domestic income of these countries, and that real GDP growth should be used only to roughly approximate changes in a country's real income. [ABSTRACT FROM AUTHOR]

The authors mention that the rise in unemployment among countries in the European Union is a deep problem relating to both macroeconomic theory and the theory of economic policy. They suggest that the model known as the General Theory of the Monetary Circuit touches on both money in the economy and a general policy framework that addresses full employment as a condition for stable economic growth. The authors discuss money creation, which overcomes constraints on expenditures, and how this leads to a full employment policy for the European Union.

The article proposes an alternative economic policy for the European Union countries. The following are the requirements to provide better provision of social needs: macroeconomic expansionary policies fueling internal demand, financial market regulation and taxation, strong structural determination of the content of effective demand, supply-side orientation of industrial and banking sectors of the economy, higher social welfare and public services and a defense of the public nature of the social security system.