IMF Working Papers

The Design of EMU

By David K. H. Begg

August 1, 1997

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David K. H. Begg The Design of EMU, (USA: International Monetary Fund, 1997) accessed November 24, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Pursuit of price stability may, but need not, exacerbate output fluctuations. This paper discusses the monetary strategy of the European Central Bank, the intermediate targets that this should entail, and implications for accountability, transparency, and reputation. Country-specific shocks will remain but output correlation may not reflect the old pattern of core and peripheral countries. The Stability Pact will force some countries to switch off their automatic stabilizers; others, with fewer fiscal problems, can retain them. Output correlations in EMU may reflect a fiscal core and fiscal periphery. Additional labor market flexibility remains the best solution.

Subject: Banking, Exchange rates, Fiscal policy, Foreign exchange, Inflation, Inflation targeting, Monetary policy, Price stabilization, Prices

Keywords: Asymmetric shocks, Credibility, ECB forecast, EMU country, EMU government, EMU participant, EMU transmission mechanisms, Europe, European Monetary Union, Exchange rate, Exchange rates, Inflation, Inflation bias, Inflation targeting, Price stabilization, WP

Publication Details

  • Pages:

    36

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1997/099

  • Stock No:

    WPIEA0991997

  • ISBN:

    9781451852233

  • ISSN:

    1018-5941

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