POLI 445 Lecture Notes - Lecture 19: Single European Act, Economic And Monetary Union Of The European Union
30 Jan 2018
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Lecture 19 - european monetary union & widespread. Exchange rate choices after capital markets open up. Choosing whether to peg: post-1975 exchange rate choices: range from using someone else"s currency to fully floating, most countries adopt open capital markets in 1990s. Framing of debates from mundell-fleming, though with changing priorities/circumstances. "bipolar hypothesis": middle ground on exchange rates is too hard to maintain: mundell-fleming once again - though now we assume states prefer open capital flows above other goals , europe moving in a different direction. Economic advantages of monetary union: avoid exchange rate uncertainty, avoid speculators - yet "fix, reduce transaction costs, prior economic integration builds internal support for monetary union. Single european act (1986) - removes capital controls among members. Disadvantages to monetary union: polic(cid:455) co(cid:374)verge(cid:374)ce (cid:374)eeded , had preferences in members" societies converged, no; so disputes over the proper polic(cid:455) (cid:373)i(cid:454) , compare preferences of members:
