EMU — A Swedish Perspective

1 Introduction.- 1.1 The aim of the book.- 1.2 The structure of the book.- 2 The Emu Project.- 2.1 Economic and monetary co-operation in Europe in a historical perspective.- 2.2 The Maastricht Treaty: objectives, timetable, and convergence criteria.- 2.3 The role and organisation of the European Central Bank.- 2.4 Other central EU institutions and bodies.- 2.5 The reference scenario — a detailed plan for the transition to the monetary union.- 3 Currencies and Exchange-Rate Systems — A Background.- 3.1 The role of a national currency.- 3.2 Exchange-rate systems.- 3.3 Experiences of different exchange-rate systems.- 3.4 Conclusions.- 4 The Emu and Social Efficiency.- 4.1 Reduced transaction costs.- 4.2 Exchange-rate fluctuations and effects on foreign trade, foreign direct investment, and interest rates.- 4.3 Effects on competition.- 4.4 Effects of lower inflation.- 4.5 Effects on seigniorage.- 4.6 Conclusions.- 5 Macroeconomic Disturbances and Monetary Policy.- 5.1 Monetary policy in an open economy.- 5.2 Exchange-rate policy and the effects of macroeconomic disturbances.- 5.3 What constitutes a suitable currency area?.- 5.4 Do floating exchange rates have destabilising effects?.- 5.5 Conclusions.- 6 Inflation and the Credibility of Monetary Policy.- 6.1 The basic inflation and credibility problem.- 6.2 Methods for dealing with the credibility problem.- 6.3 The monetary union, the credibility problem and inflation.- 6.4 Sweden’s ability to handle the credibility problem independently and the position of the Riksbank.- 6.5 Conclusions.- 7 Fiscal Policy and the Emu.- 7.1 The development of public finances.- 7.2 The Maastricht Treaty and fiscal policy.- 7.3 The arguments for fiscal policy rules.- 7.4 The scope for stabilisation policy.- 7.5 Does the monetary unioninvolve further demands for fiscal policy integration?.- 7.6 Conclusions.- 8 The Labour Market and the Monetary Union.- 8.1 Equilibrium unemployment, long-term unemployment, and economic policy.- 8.2 Macroeconomic disturbances and the need for labour-market adjustment.- 8.3 Nominal wage and price rigidities.- 8.4 Labour mobility.- 8.5 A strategy to combat unemployment in Sweden.- 8.6 A common European policy against unemployment?.- 8.7 Summary.- Appendix: The effect of a change in relative labour costs on exports and imports — a rough estimate.- 9 The Emu as a Political Project.- 9.1 Economic and political integration: the continental model.- 9.2 The EMU’s role in European integration.- 9.3 The EU as a negotiating system.- 9.4 Franco-German co-operation.- 9.5 The formation of the EMU: the negotiations 1988–91.- 9.6 The EMU and differentiated integration.- 9.7 Political risks associated with the EMU.- 9.8 Summary and conclusions.- 10 The Emu, Democracy, and Sweden’s International Influence.- 10.1 Democratic control and accountability.- 10.2 The EMU and the moulding of political opinion.- 10.3 The EMU and Sweden’s foreign-policy relations.- 10.4 Conclusions.- 11 Transition Problems.- 11.1 The Maastricht Treaty’s decision-making procedure and convergence criteria.- 11.2 The appropriateness of the convergence criteria.- 11.3 Economic conditions for a monetary union in 1999.- 11.4 Political conditions for a monetary union in 1999.- 11.5 An overall assessment of the conditions for a monetary union in 1999.- 11.6 Other transition problems.- 11.7 Conclusions.- 12 Exchange-Rate Arrangements between Participants in the Monetary Union and Non-Participants.- 12.1 The future ERM system.- 12.2 Advantages and disadvantages of a new ERM system.- 12.3 Alternativeexchange-rate arrangements.- 12.4 Conclusions.- 13 Summary and Conclusions.- 13.1 Social efficiency aspects.- 13.2 Stabilisation-policy arguments.- 13.3 Political aspects.- 13.4 Conclusions about the EMU project as a whole.- 13.5 Conclusions about Sweden’s participation in the monetary union.- 13.6 Critical factors.- Statement of Dissenting Opinion by Nils Gottfries.- References.