The European Economy at the Cross Roads: Structural Reforms, Fiscal Constraints, and the Lisbon Agenda

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

*Corresponding author for this work

    Research output: Contribution to journalJournal articleResearchpeer-review


    This paper studies the incentives to sustain and extend a monetary union under alternative assumptions about the extent of market reform within the union and accession 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 therefore want a union where there has been sufficient reform, and also one where markets are more flexible than their own. But existing members will want the same properties of their partners. Fiscal restrictions may exaggerate this incentive mismatch and could therefore delay the necessary reforms. Similarly, too large costs up front may also delay those reforms.
    Original languageEnglish
    JournalResearch in International Business and Finance
    Issue number2
    Pages (from-to)229-250
    Number of pages21
    Publication statusPublished - 2005


    • EMU
    • Enlargement
    • Structural flexibility
    • Fiscal policy

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