New Political Economy of Exchange Rate Policies and the Enlargement of the

This work examines the political economy of exchange-rate policies in the context of the eastward enlargement of the eurozone. The analysis shows that prospective members of the EMU are likely to pass on some of the incurred Maastricht costs of convergence to the current EMU-members. The transmission mechanism is an altered exchange-rate policy that is carried out utilizing a "threaten-thy-neighbour"-strategy. The nature of the arising conflict between current and prospective EMU-members originates from both parties' admitted inclination to complete the enlargement process, complicated by their disinclination to bear the costs. The ensuing moral-hazard behaviour of the CEECs proves to be one of brinkmanship. The subsequent bargaining game results in a robust outcome most likely in terms of providing extra European funding. This may then ensure a stabilization of the CEECs' convergence toward the EMU, and a successful completion of eastward enlargement of the eurozone.

ISBN 3790817619   Pages 165 ISBN13 9783790817614 (What's this?)   Volumes 1 Publisher Springer-Verlag Berlin and Heidelberg GmbH & Co. KG   Weight (grammes) 259 Imprint Physica-Verlag GmbH & Co   Published in Heidelberg Format Paperback   Series title Contributions to Economics Publication date 05 Oct 2006   Height (mm) 235 Library of Congress HF   Width (mm) 155 DEWEY 332.456094   Spine width (mm) 10 DEWEY edition DC21   Academic level Professional / Scholarly

1		Introduction		1
2		Setting the stage		9
3		The core, the crux, and the costs involved		39
4		Exchange-rate policies in CEECs		57
5		Game-theoretic analysis		75
6		Empirical analysis		107
7		Conclusions		131

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