The euro: Evolution and prospects

Book abstract:

The single currency is not simply a question of 'in' or 'out' for the authors of this book who focus on tackling the question of whether the euro is in the interests of Europe, providing a sustained argument as to its current deficiencies and a thoughtful treatise on alternative policies and institutional arrangements.

The introduction sets out the authors' initial premise that amendment not abolition is their preferred route. Chapter two charts the post-war history and progress towards monetary union and the influences that brought about the current architecture of the financial institutions which accompany the euro. Chapter three examines the economic scene and the disparities present across the eurozone at the time of its launch with criticism of the constraints arising from the Stability and Growth Pact. The authors turn in chapter four from fiscal issues to the consideration of the monetary and financial arrangements accompanying the euro and comment upon the inhibiting power and influence of the European Central Bank (ECB) as currently constructed. Chapter five explores the role of money demand functions across the eurozone and questions the role of money targeting as an effective tool in controlling inflation at an EU-wide level. Chapter six seeks to provide an explanation for the decline in value of the euro since its inception and contests current explanations, which include strength of the US economy and the inflexibility of labour markets in the eurozone. The authors contend that the divergence of the participant economies suffering imposition of the single currency, low growth and high unemployment have led to the exchange rate decline and that amendment in the ways set out is the route forward.

The volume will interest economists, policy researchers and makers, politicians and might be considered compulsory reading for all those engaged in the arguments surrounding the Stability and Growth Pact.

Philip Arestis is Professor of Economics, South Bank University, London UK. Andrew Brown is a Lecturer in Economics Malcolm Sawyer is Professor of Economics, University of Leeds, UK