Europe at the Cross Roads: Structural Reforms, Fiscal Constraints, and EMU Enlargement. An Empirical Analysis

Andrew Hughes Hallett, Svend E. Hougaard Jensen, Christian Richter

    Research output: Contribution to journalJournal articleResearchpeer-review


    This paper studies the incentives to enlarge a monetary union under alternative assumptions about the extent of market reform within the union and in candidate countries. Lack of labour mobility, or wage/price flexibility, or fiscal reform, brings costs for both new entrants and in the existing union. Countries will only want to join a union where there has been sufficient reform, and where markets are more flexible than their own. But existing members will want the same properties of their new partners. Fiscal restrictions may exaggerate this incentive mismatch and could delay the necessary reforms. Similarly, too large costs up front may also delay those reforms.
    Original languageEnglish
    Issue number1
    Pages (from-to)21-50
    Number of pages30
    Publication statusPublished - Feb 2005

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