Search

We estimate a New Keynesian DSGE model on French, German, Italian, and Spanish data. The main aim of this paper is to check for the respective sets of parameters that are stable over time, making use of the ESS procedure ('Estimate of Set of Stable parameters') developed by Inoue and Rossi (Rev Econ Stat 93(4):1186-1204, ). This new econometric technique allows to address the stability properties of each single parameter in a DSGE model separately. In the case of France, Germany, and Italy our results point to structural breaks after the beginning of the second stage of EMU in the mid-nineties, while the estimates for Spain show a significant break just before the start of the third stage in 1998. Specifically, there are significant changes in monetary policy behavior for France, Italy, and Spain, while monetary policy in Germany seems to be stable over time. [ABSTRACT FROM AUTHOR]

Abstract: The Latin Monetary Union was initiated in 1865 by France, Belgium, Italy, and Switzerland. We find that LMU membership or adoption of a gold standard is frequently associated with lower volatility of private bill yields, bond yields, inflation, and deviations from Purchasing Power Parity. However, neither standard induces convergence with LMU leader France or gold standard leader Great Britain. Bond yield spreads indicate that adoption of the gold standard is more credible than membership of the LMU. Italy is an outlier, perhaps due to errant fiscal and monetary policies. A comparison to data from the modern EMS/EMU confirms that the LMU was a weaker and less credible currency arrangement. [Copyright &y& Elsevier]

French policy-makers have been caught in a dilemma with regard to the construction of the economic governance dimension of economic and monetary union (EMU) between two strong but contradictory preferences: on the one hand, the supranational consequences of an interventionist approach to macroeconomic policy and, on the other hand, a Gaullist reflex to retain sovereignty as much as possible and to insist upon intergovernmentalism in EU-level macroeconomic policy-making. From the late 1980s to the present day, French governments have promoted the construction of economic governance in ways which can be seen in terms of these contradictory preferences and they have consistently maintained a communicative discourse that challenged the supremacy of the Treaty-based 'price stability' goals of economic governance. The development of economic governance has involved less 'top-down' Europeanization and 'transformation' of French policy than 'bottom-up' Europeanization, 'accommodation' and 'absorption'. [ABSTRACT FROM AUTHOR]

EMU represented an important change in the economic constitution of the European Union. It is, to a large extent, a culmination of a process of Franco-German reconciliation and understanding. However, in the postwar period, there were significant differences in thought and economic policy-making in Germany and France. France was dominated by the 'tradition républicaine', giving a central role to the state in economic life. In Germany, the federal structure of the state went together with the social market economy. In this paper an analysis is presented of these differences in thought and economic policy-making, how they evolved through time, and how they contributed to shaping the nature and economic constitution of the European Union. The focus of the paper is on the Rome Treaties, the Werner Report and the Maastricht Treaty process. [ABSTRACT FROM AUTHOR]

The banking Sector would need to make considerable investments in order to facilitate the introduction of a single currency but it faces uncertainty as to whether, when, where and how European monetary union (EMU) might start. 'Whether' is not so much a matter of claimed economic benefits (some of which are contradictory) or costs (which are uncertain) but of Franco-German political determination. 'When and where' partly depends on meeting the economic convergence criteria, interpretation of which is a matter of political judgement. Many aspects of 'how' remain to be decided including legal continuity of contracts and monetary policy instruments. Although intended to enhance the Single Market, which is incomplete anyway, there is a risk that loopholes in existing legislation could be exploited for protectionist purposes. [ABSTRACT FROM AUTHOR]