New Political Economy Of Exchange Rate Policies And The Enlargement Of The Eurozone

This work examines the political economy of exchange-rate policies in the eastward expansion of the eurozone. Analysis shows that prospective members of the EMU are likely to pass on some costs of convergence to the current EMU members. The mechanism is an altered exchange-rate policy that utilizes a "threaten-thy-neighbour" strategy. This could ensure a stabilization of the CEECs' convergence toward the EMU, and a successful eastward enlargement of the eurozone.

The Eastern Enlargement of the EU will not be complete until the new member states join the EMU. Economic and political economy arguments point to fast EMU accession of new member states. Failure to do so will create a two speed Europe, a fundamental change in the economic and political architecture of the EU, adding to the strains already evident between core and peripheral countries. Current high level of trade and business cycle integration of new member states with the Eurozone, decreases the probability of asymmetric shocks. Lower transaction costs, elimination of exchange rate risk and the danger of currency crises, further trade and investment creation, lower interest rates and large fiscal gains, should outweigh the loss of the exchange rate as adjustment tool. The Eastern Enlargement of the Eurozone provides comprehensive economic analysis of theoretical, empirical and political issues that will determine whether EMU enlargement is a success, which has implications for all common currency systems.

The dollar has been the dominant currency of the world economy for almost a century; since 2002, the euro has gained widespread international acceptance resulting in important institutional, economic and financial changes both for the euro zone, the United States and the world economies, affecting foreign exchange and financial markets as well as economic activities around the world. In years to come, the international role of the euro will hinge on the validity of the fundamental idea underlying its creation, namely that important components of sovereignty can be pooled and shared among nations in the pursuit of common economic and political objectives. This key book assesses the international role of the euro, discusses its impact on global financial markets, shifting global exchange rate relationships and their implications. With input from various disciplines (economics, business and political science), it foments discussions intended to facilitate an exchange of ideas among academics, practitioners and the local business community.

Before long the EU's new member states will join the European Monetary Union (EMU) and introduce the Euro. There can be no doubt that taking such a step will accelerate their incorporation into the European integration process. At the same time, however, fierce economic and political risks are likely to arise both for the new and for the old member countries. In the first place, the new EU members in Central Europe (CE) expect an early accession to the eurozone to result in a rise in capital imports which will allow for a narrowing of the economic gap between the old and the new members that will undoubtedly continue to exist for decades to come. Fixed exchange rates and even a common currency will foster trust and intensify the exchange of goods, services, capital and labour between both regions, while the concurrent economic growth will contribute to political and economic stability in CE. The introduction of the euro in Central Europe, however, will be attended by considerable economic, political and social risks. Both production and finance structures in Central and Eastern Europe have not yet completely overcome the heritage of decades of communist central planning. Thus, a rapid and premature elimination of monetary and exchange rate autonomy may lead to social hardships that are likely to destabilise these countries. This is particularly true for the labour markets which, as a consequence of monetary opening, are likely to be liberalised. Since structural unemployment, inherited from the planned economic system, remains high, the number of social losers is likely to rise and societal polarisation increase. Probably the biggest problem the new EU members have to face is their current account deficit, which limits the rooms for political and economic manoeuvring. These deficits, however, are almost entirely financed by volatile capital imports. A way out may be the smooth conveyance of economic strategy from a foreign investment dominated growth path to one of sustainable growth that attempts to minimise the risks of financial crisis. This is particularly true for monetary and exchange rate policies which have to induce the trust of the financial markets with respect to both the choice of the exchange rate regime as well as the actual exchange rate. The success of enlargement depends both on the speed of the process and on the procedure how to implement the right political and economic mechanisms towards sustainable self-financed growth. A corresponding catalogue of economic policy instruments contains measures that support the liberalisation of goods and factor markets, the stimulation of education and 14 infrastructure, as well as those tax and fiscal activities that induce domestic savings and investment. By employing these measures the current account deficits can be gradually reduced and a sustainable convergence of the new EU members' towards the old ones' economic growth may be achieved. The more effective these measures are employed, the earlier these countries are prepared to compete on the all-European market and to accomplish sustainable growth. Such a development will not be felt as a burden to the „old" EU members. Thus, it is in the well-understood self-interest of the „old" members themselves to support these adjustment processes because it reduces or even eliminates the risks of providing assistance against a betting economic and political destabilisation in Central Europe once the euro is finally introduced.

This intriguing study sheds light on the efficiency of corporate control allocation in Chinese listed firms. Using a panel data set for the period 1996 to 2006, it examines the frequency, causes and consequences of changes in corporate control. The results indicate that poorly performing firms are the predominant targets of control changes. The findings provide insights into the motives and constraints of the key players involved in governance practices in China.

Increased financial performance and employee commitment are among the benefits the CSR model can offer corporations. This discussion presents practitioners and scholars with a unique examination of how firms can maximise productivity through the implementation of CSR programs. This publication discusses how CSR addresses business concerns of feasibility, barriers and drivers of internal and external practice; and whether a CSR program is likely to constitute a success or failure.

Insurance intermediaries can help consumers to economize on information and transaction costs in insurance markets. This book analyzes conduct and performance in the market for insurance information services by applying search theoretical and industrial organization approaches. Based on a sample of 927 insurance intermediaries, coverage empirically studies the factors that affect the quality of the information services provided by them.

This book analyzes economic interdependence in the Euro Area. It offers expert estimates of the sign and size of economic spillovers. Moreover, the authors explore the impact of economic policy coordination on economic performance in the Euro Area. Among the many topics explored are the link between fiscal and monetary policies in the Euro Area and the coordination of fiscal policies and of structural reforms.

This book analyses the process of regionalisation and plots its future development. Regionalisation is a common feature of the changing territorial organisation of European states today. Regionalisation alone, however, cannot produce any of the benefits attributed to it without looking into the conditions in which it occurs. Bringing together theory and empirical applications, coverage examines a host of these conditions.