Advertisement

European Monetary Integration and the EU–UK Relationship

  • Corrado MacchiarelliEmail author
Chapter

Abstract

The history of European integration has been characterized by several “stops-and-goes” with considerable support on political grounds. In this chapter, we discuss the role of European integration for the future of the EU–UK relations. Integration, consistent with the idea of “completing” the European Monetary Union (hence, a “Genuine Economic and Monetary Union”—GEMU), will have the obvious consequence of affecting the UK as well and the future of its negotiations with the EU. Provided that European integration worked in the past, the net benefits of staying out of the EU ex ante may be different from the same benefits ex post, particularly in the likely scenario the Union will have to “comprehensively” move towards a GEMU to safeguard its integrity.

References

  1. Alcidi, C., & Giovannini, A. (2013, April 25), The ECB dilemma—financial stability or independence? In Reconciling governance and model: A five-fold narrative for europe. Bruges: IED and Madariaga-College of Europe Foundation Conference at the European Parliament.Google Scholar
  2. Alesina, A., & Barro, R. (2002). Currency unions. Quarterly Journal of Economics, 117(2), 409–436.CrossRefGoogle Scholar
  3. Angeloni, I., & Dedola, L. (1999). From the ERM to the euro: New evidence on economic and policy convergence among EU countries. ECB Working Paper No 4.Google Scholar
  4. Baldwin, R., & Wyplosz, C. (2006). The economics of European integration (2nd ed.). Berkshire: McGraw-Hill Education.Google Scholar
  5. Baun, M. J. (1996). The Maastricht treaty as high politics: Germany, France and the European integration. Political Sciences Quarterly, 110(4), 605–624. CrossRefGoogle Scholar
  6. Bayoumi, T., & Eichengreen, B. (1993). Shocking aspects of European monetary integration. In F. Torres & F. Giavazzi (Eds.), Adjustment and growth in the European monetary union. Cambridge: Cambridge University Press.Google Scholar
  7. Bean‚ C. R. (1992). Economic and monetary union in Europe. The Journal of Economic Perspectives6(4)‚ 31–52.Google Scholar
  8. Begg, I. (2014). Genuine economic and monetary union. In S. Durlauf & L. Blume (Eds.), The new Palgrave dictionary of economics. London: Palgrave.Google Scholar
  9. Begg, I., Macchiarelli, C., Bachtler, J., Mendez, C., & Wishlade, F. (2014). European economic governance and cohesion policy. Report to the European Parliament Committee on Regional Development, European Parliament‚ IP/B/REGI/IC/2013-086‚ Jan.Google Scholar
  10. Butler, G., Jensen, M. D., & Snaith, H. (2016). “Slow change may pull us apart”: Debating a British exit from the European union. Journal of European Public Policy, 23(9)‚ 1278–1284.Google Scholar
  11. Bordo‚ M. (2006). Sudden Stops‚ Financial Crises and Original Sin in Emerging Countries: Déjà vu? Paper prepared for the Conference: Global Imbalances and Risk Management. Has the Center become the Periphery? Madrid, Spain May 16–17.Google Scholar
  12. Bordo‚ M.‚ & James‚ H. (2013). The European crisis in the context of the history of previous financial crises. Journal of Macroeconomics39‚ 275–284.Google Scholar
  13. Bordo‚ M. D.‚ & Meissner‚ C. M. (2007). Financial crises, 1880–1913: The role of foreign currency debt. In S. Edwards‚ G. Esquivel & G. Márquez (Eds.)‚ The Decline of Latin American Economies: Growth, Institutions, and Crises. (pp. 139–194). Chicago: University of Chicago Press.Google Scholar
  14. Calmfors‚ L. (2001). Unemployment‚ labour-market reform‚ and monetary union. Journal of Labor Economics19(2)‚ 265–289.Google Scholar
  15. Calmfors, L., Driffill, J. (1988, April). Bargaining structure, corporatism, and macroeconomic performance. Economic Policy, 6, 14–61.Google Scholar
  16. Campos‚ N.‚ Coricelli, F.‚ & Moretti‚ L. (2014). Economic growth and political integration: Synthetic counterfactuals evidence from Europe. mimeo.Google Scholar
  17. Campos, N., Macchiarelli, C. (2016a, March 03). Brexit, ‘euro-ins’, and ‘euro-outs’. VoxEU.org.
  18. Campos, N., Macchiarelli, C. (2016b). Core and periphery in the European monetary union: Bayoumi-Eichengreen 25 Years Later. Economics Letters, in-press.Google Scholar
  19. Canova, F., Ciccarelli, C., & Ortega, E. (2005). Similarities and convergence in G-7 cycles. Journal of Monetary Economics, 54, 85–878.Google Scholar
  20. Chari, V. V., Dovis, A., & Kehoe, P. (2015). Rethinking optimal currency areas. Federal Reserve Bank of Minneapolis, Research Department Staff Report.Google Scholar
  21. Chartered Institute of Personnel and Development. (2015, January). Employment regulation and the labour market. Policy Report. Available at https://www.cipd.co.uk/Images/employment-regulation-and-the-labour-market_2015_tcm18-10238.pdf.
  22. De Grauwe, P. (1994). Towards European monetary union without the EMS. Economic Policy, 9(18), 149–185.CrossRefGoogle Scholar
  23. De Grauwe, P. (2016a). Economics of Monetary Union (11th ed.). Oxford: Oxford University Press.Google Scholar
  24. De Grauwe, P. (2016b, February 24). Why the European union will benefit from brexit. Social Europe.Google Scholar
  25. De Grauwe, P., & Mongelli, F. (2005). Endogeneities of optimum currency areas: What brings countries sharing a single currency closer together? (p. 0468). ECB WP: Frankfurt.Google Scholar
  26. De Grauwe, P., & Ji, Y. (2013). Self-fulfilling crises in the Eurozone: An empirical test. Journal of International Money and Finance, 34, 15–36.CrossRefGoogle Scholar
  27. De Grauwe, P., & Ji, Y. (2015). The fragility of two monetary regimes: The European monetary system and the Eurozone. International Journal of Finance & Economics, 20(1), 1–15.CrossRefGoogle Scholar
  28. De la Dehesa, G. (2012). A self-inflicted crisis? Design and management failures leading to the Eurozone crisis (Occasional Paper No. 86). Washington DC: Group of Thirty.Google Scholar
  29. De Larosière‚ J., Balcerowitz‚ L.‚ Issing‚ O.‚ Masera‚ R.‚ Mc Carthy‚ C.‚ Nyberg‚ L.‚ Pérez‚ J.‚ & Ruding, O. (2009). The high–level group on financial supervision in the EU-de larosiere report‚ Brussels. Google Scholar
  30. Driffil, J. (2006). The centralization of wage bargaining revisited: What have we learnt? Journal of Common Market Studies, 44, 731–756.CrossRefGoogle Scholar
  31. Eichengreen‚ B.‚ & Hausman‚ R. (1999). Exchange rates and financial fragility. Paper presented at Federal Reserve Bank of Kansas City symposium‚ New challenges for monetary policy. 26–28 August‚ Jackson Hole‚ Wyoming.Google Scholar
  32. Eichengreen‚ B.‚ & Temin‚ P. (2010). Fetters of gold and paper. Oxford Review of Economic Policy26(3)‚ 370–384.Google Scholar
  33. Eichengreen B.‚ & Wyplosz‚ C. (1993). The unstable EMS (Vol. 1993, No. 1, pp. 51–143). Brookings Papers on Economic Activities.Google Scholar
  34. European Central Bank. (2010). Recent developments in supervisory structures in the EU Member States (2007–2010)‚ Frankfurt‚ October.Google Scholar
  35. European Central Bank. (2011a). The monetary policy of the ECB. Frankfurt: European Central Bank.Google Scholar
  36. European Central Bank. (2011b, March). The reform of economic governance in the Euro Area—Essential Elements. ECB Monthly Bulletin Article. Google Scholar
  37. Farhi, E., & Werning, I. (2015). Labor mobility in currency unions. MIT Mimeo.Google Scholar
  38. Frankel, J., & Rose, A. (1998). The Endogeneity of the optimum currency area criteria. Economic Journal, 108(441), 1009–1025.CrossRefGoogle Scholar
  39. Fuest‚ C.‚ & Peichl‚ A. (2012). European Fiscal Union: What Is It? Does It Work? And Are There Really ‘No Alternatives’? CESifo Forum 1 (special issue on European Fiscal Union)‚ 3–9.Google Scholar
  40. Gerba, E., Macchiarelli, C. (2015). Interaction between monetary policy and bank regulation: Theory and European practice. LSE Systemic Risk Centre, Special Paper No. 10.Google Scholar
  41. Gerba, E., Macchiarelli, C. (2016, February). Policy options and risks of an extension of the ECB’s quantitative easing programme: An analysis. Monetary Policy Dialogue, note to the European Parliament IP/A/ECON/2016-01.Google Scholar
  42. Giavazzi, F., & Pagano, M. (1988). The advantage of tying one’s hands: EMS discipline and central Bbank credibility. European Economic Review, 32, 1055–1075.CrossRefGoogle Scholar
  43. Glick, R., & Rose, A. K. (2016‚ August). Currency unions and trade: A post-EMU reassessment. European Economic Review, 87, 78–91.Google Scholar
  44. Golden‚ M., Wallerstein, M., & Lange, P. (2006). Union centralization among advanced industrial societies: An empirical study of organisation for Economic Co-operation and Development (OECD) countries, 1950–2000. ICPSR04541-v1. Ann Arbor, MI: Inter-University Consortium for Political and Social Research. Google Scholar
  45. Goodwin, M., Milazzo, C. (2015, December). Britain, the European union and the referendum: What drives euroscepticism? Europe programme briefing.Google Scholar
  46. Gros, D., & Schoenmaker, D. (2014). European deposit insurance and resolution in the banking union. Journal of Common Market Studies, 52(3), 529–546.CrossRefGoogle Scholar
  47. Harding, D., & Pagan, A. (2006). Synchronization of cycles. Journal of Econometrics, 132(1), 59–79.CrossRefGoogle Scholar
  48. Holden, S. (2009). The three outsiders and the monetary union. In SNS, EMU at ten: Should Denmark, Sweden, and the UK join? (Chapter 6). Stockholm: SNS Förlag.Google Scholar
  49. Hunt‚ J. (2008). The economics of German reunification. In N. Steven Durlauf & Lawrence E. Blume (Eds.), The new Palgrave dictionary of economics‚ London: Palgrave Macmillan.Google Scholar
  50. International Monetary Fund. (2013). IMF report on unconventional monetary policies—Recent experience and prospects.Google Scholar
  51. Juncker, J.-C., Tusk, D., Dijsselbloem, J., Draghi, M., & Schulz, M. (2015). Completing Europe’s economic and monetary union. Brussels: European Commission.Google Scholar
  52. Klein, M. W. (1998, March/April). European monetary union. New England Economic Review, 3(12).Google Scholar
  53. Kontopoulos, Y., & Perotti, R. (1999). Government fragmentation and fiscal policy outcomes: Evidence from OECD countries. In J. M. Poterba & J. Von Hagen (Eds.), Fiscal institutions and fiscal performance (NBER conference report) (pp. 81–102). Chicago: University of Chicago Press.Google Scholar
  54. Krugman, P. R. (1993). Lessons of Massachusetts for EMU. In F. Torres & F. Giavazzi (Eds.), Adjustment and growth in the European monetary union (pp. 241–261). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  55. Macchiarelli, C., Sangalli, I. (2007). From EMS to EMU: An obliged passage? In Consortium for research and continuing education in economic. New York: Mimeo.Google Scholar
  56. Macchiarelli, C. (2016). European banking union. In S. N. Durlauf & E. L. Blume (Eds.), The new Palgrave dictionary of economics. London: Palgrave Macmillan.Google Scholar
  57. Massmann, M., & Mitchell, J. (2002). Have UK and Eurozone business cycles become more correlated? National Institute Economic Review182(1)‚ 58–571.Google Scholar
  58. Mayes‚ D. G. (2011). European monetary integration. In S. N. Durlauf & E. L. Blume (Eds.)‚ The new palgrave dictionary of economics. Online Edition‚ 2011.Google Scholar
  59. McKinnon, R. (1963). Optimum currency area. American Economic Review, 53, 717–725.Google Scholar
  60. Mongelli, F. (2013). The mutating Euro area crisis is the balance between “sceptics’’ and “advocates’’ shifting? (p. 144). ECB WP: Frankfurt.Google Scholar
  61. Moser, G., Pointner, W., & Reitschuler, G. (2004). Economic growth in Denmark, Sweden and the United Kingdom since the start of monetary union. Monetary Policy & the Economy‚ Q4/04, Oesterreichische Nationalbank.Google Scholar
  62. Mundell, R. A. (1994, November 25). The European monetary system 50 Years after bretton woods: A comparison between two systems. Paper presented at project Europe 1985–1995. The tenth edition of the “Incontri di Rocca Salimbeni” meetings, in Siena.Google Scholar
  63. Mundell, R. (1973). Uncommon arguments for common currencies. In H. G. Johnson & A. K. Swoboda (Eds.), The economics of common currencies (pp. 114–132). London: George Allen and Unwin Ltd.Google Scholar
  64. Mundell, R. (1961). A theory of optimum currency areas. American Economic Review, 51, 657–665.Google Scholar
  65. Nechio, F. (2011, June 13). Monetary policy when one size does not fit all. FRBSF Economic Letter, 18, 13.Google Scholar
  66. Obstfeld, M. (2013). Finance at center stage: Some lessons of the Euro crisis (CEPR Discussion Paper No. DP9415).Google Scholar
  67. Oliver, T. (2016). European and international views of Brexit. Journal of European Public Policy, 23(9)‚ 1321–1328.Google Scholar
  68. Onorante L. (2007). Monetary and fiscal policy in a monetary union. In R. Beetsma, C. Favero, A. Missale, A. Muscatelli, P. Natale, & P. Tirelli (Eds.), Monetary policy, fiscal policies and labour markets: Macroeconomic policymaking in the EMU. New York: Cambridge University Press.Google Scholar
  69. Padoa-Schioppa, T. (1999, December 29). “Europas Notenbank ist einsam” (“Europe’s central bank is lonely”), interview with Die Zeit.Google Scholar
  70. Peersman, G., & Smets, F. (1999). The Taylor rule: A useful monetary policy benchmark for the Euro area? International Finance, 2(1), 85–116.CrossRefGoogle Scholar
  71. Pesaran, H., Smith, V., & Smith, R. (2007). What if the UK or Sweden had joined the Euro in 1999? An empirical evaluation using a global VAR. International Journal of Finance & Economics, 12(1), 55–87.CrossRefGoogle Scholar
  72. Pisani-Ferry, J. (2012). The euro crisis and the new impossible trinity. Brussels, Bruegel Policy Contribution 2012/01. Brussels: Bruegel.Google Scholar
  73. Pisani-Ferry, J. (2013). The known unknowns and unknown unknowns of European monetary union. Journal of International Money and Finance, 34, 6–14.CrossRefGoogle Scholar
  74. Ramey, V. (forthcoming). Macroeconomic shocks and their propagation. In J Taylor and H Uhlig (eds.), Handbook of Macroeconomics (Vol. 2). Elsevier.Google Scholar
  75. Ramiro Troitiño, D. (2016). The british position towards European integration: A different economic and political approach. Baltic Journal of European Studies, 4(1), 119–136.Google Scholar
  76. Rodrik‚ D. (2007). The inescapable trilemma of the World Economy. http://rodrik.typepad.com/dani_rodriks_weblog/2007/06/the-inescapable.html.
  77. Salvatore, D. (1997). The common unresolved problem with the EMS and EMU. American Economic Review, 87(2), 224–226.Google Scholar
  78. Sapir, A., Wolff, G. (2016). One market, two monies: The European union and the United Kingdom’. Policy Brief 2016/01. Bruegel.Google Scholar
  79. Scharpf‚ F. W. (2011). Monetary union‚ fiscal crisis and the preemption of democracy. LEQS paper 36/2011.Google Scholar
  80. Sinn, H.-W. (1996). International implications of German unification. National Bureau of Economic Research (Cambridge) (Working Paper No. 5839).Google Scholar
  81. The Royal Society. (2016). The role of the EU in international research collaboration and researcher mobility, on-line report.Google Scholar
  82. Valli V. (2002). L’Europa e l’economia mondiale. In Trasformazioni e prospettive, (pp. 100–128). Roma: Carocci Editore.Google Scholar
  83. Velis J. O. (1995). The collapse of the EMS: Symptomatic of a doomed EMU? International Conference of the European Community Studies Association. Charleston (SC).Google Scholar
  84. Weber, A. A. (1991). Reputation and credibility in the European monetary system. Economic Policy, 6(12), 58–102.CrossRefGoogle Scholar
  85. Wyplosz, C., & Kostrup, S. (2010). A common pool theory of supranational deficit ceilings. European Economic Review, 54, 269–278.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2017

Authors and Affiliations

  1. 1.Economics and FinanceBrunel University LondonLondonUK

Personalised recommendations