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Working Paper
Is the ECU an optimal currency basket?
Recently the role of the ECU has increased and there has been concern whether it is sustainable. The first part of this paper examines the composition of the ECU and investigates the impact of changes in this composition on the value of the ECU. The results show that when there is little exchange rate variability among the currencies that comprise the ECU or when the changes in composition are small the value of the ECU remains stable. The second part of this paper constructs an alternative, optimal basket of currencies for Germany and compares this basket to the ECU. The path of the optimal ...
Working Paper
The hedging performance of ECU futures contracts
Journal Article
Why is Europe forming a monetary union?
On January 1, 1999, 11 European countries will officially become a monetary union with one currency, the euro. Forming a monetary union brings benefits, such as increased trade between countries. But it carries costs as well. To join the union, each country must cede its right to set individual monetary and exchange-rate policies. Yet each country?s economic situation may differ from that of its fellow union members. How will these countries--and the union--fare when economic shocks hit, especially shocks that affect one country or region more than another? In this article, Gwen Eudey weighs ...
Journal Article
Fiscal constraints in the EMU
Journal Article
Decision time for European Monetary Union
If the plans of European governments for economic and monetary union by the end of the decade are realized, a new common currency called the euro will be in use in at least a few western European countries within five years. Even earlier, starting in 1999, a new European Central Bank is slated to take control of monetary policy in the initial member countries. ; This article examines the economic and political factors that will determine whether monetary union proceeds on schedule and, if so, which countries are likely to be initial members. There is little chance that most of the countries ...
Journal Article
ECU, who?
Journal Article
The EMU: forerunners and durability
The first article examines the history and theory of monetary unions to ask what factors will foster a stable European Monetary Union. It concludes that a decentralized arrangement of national central banks may undermine the EMUs durability.
Journal Article
A Yankee recipe for a Eurofed omelet
The second article, reprinted from the Wall Street Journal/Europe, suggests a compromise between a centralized and decentralized structure for the union.
Journal Article
A European system of central banks: observations from abroad
A proposal for establishing price stability as the sole objective of a European system of central banks.
Working Paper
The dollar as an official reserve currency under EMU
This paper analyzes official reserve-holding behavior in the EU countries in an attempt to assess the effect EMU might have on official holdings of dollar reserves. A wide range of projections are presented for the effect of EMU on the overall demand for reserves, some based on earlier research results and some on new estimates. In the estimation and simulation of the behavior of EU countries in the last half of the 1980s, the contributions of country-specific factors appear to swamp the systematic components that had been isolated in earlier research. Earlier research results are also used ...