Monetary Policy at the European Periphery

At long last, monetary union has dawned in Europe. Eleven member states now share the common currency, forming a larger EMU than many observers, who thought that monetary union would initially be restricted to the core countries of the European Union, expected. The next item on the EMU agenda now is the question how to bring the remaining members of the European Union into the monetary union. I.A. Mourmouras and M. G. Arghyrou address this question from the perspective of Greece, and, with it, future European Union members such as Hungary and Poland. Their book presents a careful and interesting study of the Greek monetary policy experiences over the past 25 years. It demonstrates how Greece moved from an inflation ridden economy characterized by rigid controls of the financial sector to an economy for which an independent central bank and inflation targeting are credible options. The study is not only interesting in itself but also in that it bears important lessons for the development of monetary policy and institutions in the candidate countries of the European Union.

Klappentext

The book proposes a monetary policy regime that is suitable for the European Periphery on the road to the euro. The first part examines the relation between the eleven founding members of the EMU and countries staying out of the EMU - paying particular attention to the European Periphery that includes Greece and all those CEE transition countries which have recently applied for EU membership. The second part of the book argues against ERM-II participation for those countries. It stresses the limits in efficiency of an ERM-II arrangement in a world of increased international capital movements, fiscal imbalances, and asymmetric real shocks. The third part offers a consistent and credible monetary framework for the achievement of price stability at the European Periphery: adoption of explicit and formal inflation targets together with political and economic independence of the central bank.

Inhalt

1. The EMU Ins and the EMU Outs: Maastricht and beyond.- 1.1. Introduction.- 1.2. On the feasibility of EMU in Europe.- 1.3. The Ins group and the Outs group.- 1.4. Monetary policy after 1999.- 1.5. Summary and concluding remarks.- 2 Greece and the European Monetary Union: a bottle half-empty or half-full?.- 2.1. Introduction.- 2.2. The Greek economy: past performance and current position.- 2.3 Costs and benefits fiom EMU membership.- 2.4. The Greek Convergence Programmes: a deficit of credibility.- 2.5. What strategy for Greece?.- 3 Monetary developments in Greece: 197597.- 3.1. A brief account of monetary events.- 3.2. The process of financial liberalization.- 3.3. Money and credit aggregates.- 3.4. Interest rates.- 3.5. Exchange rates.- 4 Recent Greek monetary policies.- 4.1. Introduction.- 4.2. Some preliminaries.- 4.3. Recent monetary strategies in Greece.- 5 From intermediate targets to formal inflation targets in Greece.- 5.1. Introduction.- 5.2. Inflation-targeting: theory and international evidence.- 5.3. Inflation in Greece.- 5.4. Main features and operation of an inflation-targeting regime in Greece.- 5.4.1. Why an inflation-targeting regime for Greece ?.- 6 An independent Bank of Greece: An idea whose time has come.- 6.1. Introduction.- 6.3. The Bank of Greece: Past experience and current regime>.- 6.4. How independent should the Bank of Greece be?>.- 6.5. Independence and other associated functions of the Bank of Greece>.- 6.6. An independent and accountable Bank of Greece>.- Annex: Assessing the recent Bill 2548197>.- 7 Summary and Lessons for EU candidates.- Appendix Tables.- List of Figures.- List of Tables.