Macroeconomic Policy Coordination and the European Monetary System

Is the european monetary System (EMS) a useful approach to the problems it is meant to solve and to the pursuit of the objectives that its promoters have set for themselves? A review by the authors of a number of economic motives which underly the creation of the EMS leads them to conclude that the various economic problems which the european readily blame on floating exchange rates find in fact their origins in the economic policies pursued by the national governments. Moreover, the authors consider that the defense of parities in the EMS, either through intervention in the exchange markets or by other means, can involve high economic costs and that in the longer run market forces always triumph when parities no longer reflect the fundamental positions of the respective economies. Among the other factors which limit the usefulness of the EMS the authors identify the continuing lack of macro-economic policy coordination by participating countries, its regional character, the underestimation of the importance of the american dollar in the international monetary system and the impact of its fluctuations on european currencies and the tendency of the EMS to harmonize inflation rates at a higher level than should be aimed for. The authors therefore conclude that it is doubtful that the EMS constitutes a useful instrument of economic policy and that efforts towards european monetary union based on such a system of parities can be successful under present circumstances.

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Can The European Monetary System Be Copied Outside Europe? Lessons From Ten Years of Monetary Policy Coordination In Europe

10.3386/w2786 ◽

1988 ◽

Cited By ~ 7

Author(s):

Francesco Giavazzi ◽

Alberto Giovannini

Keyword(s):

Monetary Policy ◽

European Monetary System ◽

Policy Coordination ◽

European Monetary ◽

Monetary System ◽

Monetary Policy Coordination

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The European Monetary System

National Institute Economic Review ◽

10.1177/002795017908700102 ◽

1979 ◽

Vol 87 ◽

pp. 5-12 ◽

Cited By ~ 1

Keyword(s):

European Monetary System ◽

Striking Feature ◽

House Of Commons ◽

European Monetary ◽

Monetary System

The most striking feature of the Bremen proposals for a new European Monetary System (EMS) was the scepticism, and in many cases hostility, with which they were received by professional economists. The main positions on macro-economic questions—orthodox, monetarist and international monetarist—were all represented among the economists who submitted written evidence to the House of Commons Expenditure Committee, when it examined the EMS proposals last November. All doubted whether the proposals, so far as they were then known, could work, and some predicted an early breakdown. Some took the view that, even if the scheme could work, it would not be to Britain's advantage to join. Such convergence of opinion among professional economists, with monetarists and Keynesians appearing to be in the same camp, is sufficiently unusual to deserve notice. Nor is this just an example of the British giving voice to the prevalent anti-European feeling. German economists, represented for example by the five Institutes, have been similarly sceptical.

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Le système monétaire européen : Le point de vue européen

Études internationales ◽

10.7202/701237ar ◽

2005 ◽

Vol 12 (3) ◽

pp. 533-547 ◽

Cited By ~ 2

Author(s):

Michel Lelart

Keyword(s):

Interest Rates ◽

International Monetary System ◽

European Monetary System ◽

The United States ◽

European Monetary ◽

International Capital Markets ◽

Monetary System ◽

American Interest ◽

International Environment ◽

The Stability

The evolution of the international monetary System prompted the nine members of the E.E.C. to establish a European Monetary System. The new statutes of the I.M.F. have in fact legalized the practice of flexible exchange rates and sanctioned the dollar's inconvertibility while eliminating the role of gold. Further, the increasing importance of the international capital markets fosters the unlimited expansion of international liquidities. it is in response to this context then that Europe seeks to create a zone of stability and to manage its own international tender in accordance with rules that it has set for itself. The author draws a positive conclusion as the System has operated without major problems so far. Nevertheless, difficulties remain: the international environment has not improved given the abrupt strengthening of the dollar and the increase in American interest rates. In addition, progress with regard to cooperation among the Nine remains slow and political change in France makes any prognosis respecting the future of the European Monetary System difficult. It was anticipated that the System would be Consolidated rapidly. It would in that event contribute more effectively to the stability of the international monetary System. It could, on the other hand, sharpen competition between Europe and the United States, between the Ecu and S.D.Rs. and between the European Monetary Fund and the International Monetary Fund.

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