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The Future of the EMU |
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reviewed by Mustafa Kutlay |
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Author: Leila Simona Talani (ed.) |
ISBN:
9780230218413 |
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Publisher:
Palgrave Macmillan |
Page:
224 |
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Type:
Hardcover |
Price:
£ 55.00 |
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Review: |
The first global crisis of the 21st century has already altered many things regarding the world political economy system. It is not only the case that new debates emerged, but old debates were also revitalized with the current debacle. One of the discussions that gained popularity, in this regard, is the future of the European Monetary Union (hereafter, EMU). As known, the sustainability of the EMU was a controversial subject in the intellectual clashes in the initial phases of the euro. Many diverging views emerged on the future of the Eurozone and scholars conducted research to understand whether it would be possible to sustain the EMU, given that European integration is an "incomplete project" from the political point of view. Similar discussions, not surprisingly, came to the fore with the exacerbation of the 2007/2008 financial crisis all around the world and in the Eurozone as well.
In this context, taking the scope and methodological approach into consideration, The Future of the EMU is a very timely and comprehensive study. The book is edited by Leila Simona Talani and brings together the well-known pundits on different aspects of political economy of European integration. The book mainly tries to reveal the underlying factors that enabled the emergence of the EMU and to explain it came into being within a "particular time and institutional frame" (p. 1). Moreover the basic question of the book is to search for an answer to the question of whether the EMU will facilitate the creation of a supranational European political complex or if it will trigger the break down of the EU project. The distinctive characteristic of the book is that it develops research programs by giving equal weight to political, economic and social dimensions simultaneously.
The book is composed of eight chapters written by different authors, an introduction and a conclusion part as well. In the first chapter, "Some Thoughts on Monetary and Political Union," Paul De Grauwe argues that in order for the euro-zone to be sustainable in the long-run, it is of vital importance for the EU to push political integration further. The discussion whether the EMU is sustainable within the existing political architecture is a well-known debate. The sceptics argue that the existing structure creates macroeconomic inconsistency in the sense that while the monetary policy is transferred to the central European institutions, the fiscal policy, mainly the tax and wage policies, remain under the sole responsibility of member states. This creates, according to the sceptics, important imbalances and weakens the hands of the euro-zone countries against the asymmetric shocks at crisis times. Paul De Grauwe is one of the prominent scholars of this argument and puts forth in his article that with the lack of a "deep variable," which mainly refers to the common sense regarding the direction and future of political integration, it is not possible to open new avenues for a well established political union. As a result, "the monetary union will remain a fragile construction" without the political will to push the political integration further (p. 26).
In chapter two, "European Fiscal Policy Co-ordination and the Persistent Myth of Stabilization," Erik Jones provides an alternative political economy framework to the so-called asymmetric constitution of macroeconomic governance in Europe. As Paul De Grauwe argues in the first chapter, with the transfer of the monetary policy to supranational level while keeping the fiscal policy in the hands of the member states, the stabilization and coordination of national policies became a necessity. Yet, Jones opposes further coordination in the fiscal realm and supports the necessity of flexibility.
In the third chapter, "The Role of Preferences and the Sustainability of EMU" Francisco Torres develops a novel framework to determine the necessary political and economic convergence for the sustainability of the euro-zone in the long-run. Having taken the convergence of political preferences at the very centre of the analysis, the author establishes a crucial link between the economic factors (which are conventionally endogenous to the discussions about EMU) and the political desirability of the single currency. The Sustainable Currency Area (SCA) framework of the author, as a result, regards the political motivations of the actors not "exogenous" to the emergence and institutional design of the EMU project.
In the fourth chapter, "Globalization vs. Europeanization: Assessing the Impact of the EMU on the Business Cycle," Michael Artis analyses the effects of a single currency on the business cycles around the EU member countries and searches for an answer to the question whether the creation of single currency produced the convergence of business cycles of its member states leading to a single, synchronized, "European business cycle." The conclusion that Artis reaches is that there is no strong evidence for the "Europeanization" of the business cycles. Moreover, the author concludes that "globalization" seems to outweigh "Europeanization."
In the fifth chapter, "EMU and the Euro-Mediterranean Dialogue: Trade Interdependence and Euro-area Countries," Giorgio Fazio sheds light on an under-researched area. The author investigates the trade effects of euro in the EU-Mediterranean relations with special reference to Barcelona process countries. As known in 1995, the EU initiated the Barcelona process to transform the region as an area of "peace and shared prosperity." Trade, in this regard, was seen a vital catalyst to improve the relations. Moreover a Free Trade Area (EU-MeFTA) was planned to be established in 2010. This chapter answers the important question of how the EMU has affected Euro-Mediterranean trade relations by employing the gravity model.
In chapter six, "In and Out of Monetary Unions: Lessons from, and Risks for the EMU: An Alternative Approach to Monetary Unions," Antimo Verde underlines the importance of France and Germany in guiding the "every step in the European economic and monetary process" (p. 110). Verde, in chapter 6, deals with the inadequacies of the OCA regarding the reasons why member states are forced to leave the monetary unions. In this context, he offers an alternative conceptual framework assuming member states a vital role in guiding the destiny of the monetary unions, and he tries to clarify the interaction between member states' policies regarding decision-making processes and OCA theory.
In chapter seven, "EMU and the Quest for Competitiveness," Leila Simona Talani, scrutinizes a crucial concept for the EU: competitiveness. As known, competitiveness has always been a sine qua non aspect of European integration and to some extent it has played a legitimizing role for economic policy making in the EU. Simona evaluates the EU's quest for competitiveness from an historical and wider political economy perspective. The author skilfully shows the relationship between the EMU, structural reforms, exchange rate policies and the unemployment problem.
In the last chapter, "The Lisbon Strategy, Macroeconomic Stability and the Dilemma of Governance with Governments (Or Why Europe is not becoming the World's Most Dynamic Economy)," Stefan Collignon overviews the history of the Lisbon Strategy which aims to make the EU "the most dynamic and competitive knowledge-based economy in the world" in 2010. After making a comparative analysis with the US, Collignon goes on to argue that the Lisbon Strategy failed to achieve its ambitious aim mainly due to the collective action problem. The author links the sub-optimal economic governance of the EU to the "legitimacy crisis" and argues that there is no political ownership for the Lisbon Strategy, since there is no EU level governance, what he calls "European Republic." The future prospects that the author draws is pessimistic in the sense that "if Europe continues with the undemocratic intergovernmental approach of Lisbon... the EU will die a slow death by gridlock, economic stagnation and unkept promises" (p. 188).
In summary, The Future of the EMU is an edited book that develops a multidisciplinary approach to a complex issue such as the EMU. Apart from touching upon the various aspects of the EMU simultaneously, the book has two further qualifications. The first is the timing of the book. As mentioned at the beginning of the review, the global financial crisis has aroused the attention of scholars regarding the future of the EMU and this book provides illuminating insights on the issue. Secondly, although it deals with a complex issue and "hard-to-understand" problems, the highly accessible format and clear arguments, make it quite easy for the people who are "outside the relevant disciplines." In a final analysis, it would be a good tour de force for people who are interested in the different aspects of European integration.
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about book: |
Amongst the numerous issues surrounding European integration, perhaps there is none more fascinating than European monetary integration. The establishment of a European currency union and the adoption of the Euro are perhaps the two most important accomplishments of the EU. And yet monetary union entails huge economic, political and social consequences for political economy in Europe and beyond. As European integration continues apace, the future of EMU becomes ever more important. Can EMU help create a strong and integrated European community, or will it prove a hindrance to the EU project?
This book brings together the most established experts in the area to provide a comprehensive interdisciplinary perspective on the issues expected to face EMU over the next few decades, and to propose solutions to the challenges which may arise. As well as offering new and insightful contributions to the integration debate, the book is also policy-oriented, and aims to assess the future impact of EMU on various EU policy areas, such as trade policy and fiscal policy, and also its impact on political union and labour markets. With a wealth of fresh and innovative interdisciplinary perspectives on the future of EMU and on the EU integration process as a whole, this fascinating book is an essential companion for all wishing to gain a greater understanding of the challenges facing European integration in the decades to come, and the part which EMU will play in the future of Europe.
*Description is retrieved from the website of Palgrave MacMillan . |
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