The political economy of monetary union

Book abstract:

This book traces the ideas of monetary integration between countries back to theories developed by economists of optimum currency areas in the early 1960s. It brings together in one collection most of the influential articles covering different areas in the increasingly topical field of monetary union.

The papers have been arranged around five key themes, guiding the reader through the evolution of the idea of monetary integration to a discussion of the practicalities involved.

The first two parts focus on the idea of optimum currency areas, widely seen to have been a precursor to the idea of monetary integration. The articles provided include the well know paper by Robert Mundell entitled 'A Theory of Optimum Currency Areas' which was published in the American Economic Review in 1961 as well as one discussing EMU in the European Union by Paul Krugman, entitled 'Lessons of Massachusetts for EMU'.

Parts III and IV provide a number of papers, written over the last decade, which examine the place of fiscal policies in a monetary union and the role of the Central Bank. Both parts offer a significant number of contributions that specifically examine the EU experience of EMU including the rules on budget deficits and the challenges facing the Central Bank. The final part of the book examines the issues of transition to monetary union.

This book will be useful for economists and academics, bringing together as it does some of the most important contributions to the debate on monetary integration from the last forty years.

Paul De Grauwe is Professor of International Economics at the University of Leuven, Belgium.