"Economic and monetary union: Transitional issues and third-stage dilemmas"

Cameron, David. (1997) "Economic and monetary union: Transitional issues and third-stage dilemmas". In: UNSPECIFIED, Seattle, WA. (Unpublished)

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Abstract

Despite the agreements negotiated in 1996, a number of difficult and contentious issues pertaining both to the transition to the third stage of EMU and the functioning of economic policy after the transition remain unresolved in the run-up to 1999. This paper examines two of the most consequential transitional and post-transitional issues. One--certainly the most consequential of the transitional issues--involves the question of which member states will qualify for participation in the third stage in 1999 by satisfying the 'convergence criteria' described in the Treaty and thereby earning the right to participate in the third stage. The other involves an important issue that will confront the member states participating in the third stage after 1999--the question of whether they will be able to redress the long-standing problems of low rates of economic growth and high levels of unemployment that afflict most of them. The paper concludes with a brief discussion of a larger issue of institutional design and governance in the EU--specifically, how, if at all, economic policy will be coordinated and conducted among the governments of the member states participating in the third stage of EMU, whether, finding themselves no longer able to control the exchange rate, monetary policy, and, to a large degree, fiscal policy, the governments of the participating member states will be able to exercise collective control of their economies.

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