This article offers a survey of the literature on European Economic and Monetary Union (EMU), in particular works that deal with the question why EMU happened and, based on this literature, what one might be able to conclude about its sustainability. It reviews the literature by dividing up the analyses into four categories: those that explain EMU at the global and at the European Union (EU) levels of analysis, explanations at the national level, and explanations at the domestic level of analysis. The review suggests that EMU was a particular European response to global developments, which was possible because of existing EU institutions. EMU was causally motivated by a Franco‐German deal, balancing national interests. Domestic motives reflect essentially opportunistic motives, and thus, cannot explain EMU. In our judgment the review suggests that Europe’s single currency will remain sustainable as long as the Franco‐German political deal sticks, the belief in the “sound money” idea remains hegemonic in Europe, and the losers from EMU are underrepresented in national and EU institutions. While opportunistic domestic motives cannot explain embarking on a long‐term project, they can definitely be sufficient to derail such a project.
In this article, we examine how national Debt Management Offices (DMOs) in developed countries handle governments' relational contracts with lenders, which are characterized by potentially important information asymmetries. In response to privileged information, the DMO can adjust the maturity of the auctioned debt perfunctorilysignaling defection from the win-win spirit of the contractor consummatelysignaling the government's cooperative attitude, and earning the trust of the lenders. We argue that politically autonomous DMOs have more credibility with lenders and can afford less consummate signals. Depending on the electoral cycle and party age, cabinets can press moderately autonomous DMOs to send less consummate signals, but will be less successful with non-autonomous DMOs, because of their low credibility. We run fixed effects regressions on a unique dataset based on more than 27,500 issues of government debt in 31 mainly Organisation for Economic Cooperation and Development countries during 2004-2012, and a unique compilation of legal texts defining the authority of DMOs.
This study argues that the euro area more than doubled trade among its members, but this process was delayed and fitful. The estimates in this article are close to those obtained by Rose and Frankel, despite the usage of methods developed by their critics. Furthermore, the euro area has increased the trade of its Mediterranean members more than the trade of other member states; it also raised trade with non-members by some 35%. The article innovates mainly by constructing a more appropriate control group to the euro area, applying better controls for the Single Market, estimating differences of trade, studying the effects of the euro on different member states, using quantile regression and naturally by relying on more recent data.
Few studies explain how wars affect trade with third parties. We argue that wartime trade policies should raise trade with friendly and enemy-hostile third parties but reduce trade with hostile and enemy-friendly third parties. At the same time, the private motivation of firms and households may be incompatible with national wartime trade policies and constrain the effectiveness of wartime trade policies. Our directed dyadic data set consists of almost all of the states from 1885 to 2000. Running a high definition fixed effects regression with two-way clustering of standard errors, we find that hostile third parties tended to reduce trade with a combatant state by roughly 30 percent. In addition, trade with third parties friendly to the enemy fell by a similar magnitude. In contrast, on average, war hardly affected trade with third parties because of substitution of war-ridden markets with third-party business partners.The rapid growth in international trade and investments that took place since the end of the Second World War has inspired hopes for a more peaceful world. Such hopes were mainly based on the proposition that interdependent states have ever more to lose by initiating hostilities against each other because war disrupts trade. Serious
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