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Global Euro: Testing Times for Transatlantic Ties? EUMA Papers, Vol. 4 No. 9, April 2007

Campanella, Miriam L. (2007) Global Euro: Testing Times for Transatlantic Ties? EUMA Papers, Vol. 4 No. 9, April 2007. [Policy Paper]

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    Theories of international cooperation (TIC) predict that deeper economic integration raises the costs of policy conflicts and promotes coordination. As the US-EU economy makes up 60 per cent of the world GDP, policymakers on the two sides of the Atlantic are expected to assign highest priority to joint policy action. Angela Merkel‘s resumption of TAFTA with the objective of fixing some regulatory issues, offers comfort to TIC’s tenets. Though, the correction of the global imbalances and especially the huge US external deficit does not add as much of comfort to TIC’s tenets. A likely overshooting of dollar’s exchange rate vis-à-vis the euro will bring huge consequences on euro zone economies. While TIC’s supporters would call for transatlantic mechanism to arbitrate and coordinate monetary policy to offset potentially huge spillover effects, this paper would suggest EMU institutions to prepare for exchange rate shock adopting a policy of risk management, rather than banking on implausible transatlantic coordination.

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    Item Type: Policy Paper
    Uncontrolled Keywords: Transatlantic economy, global imbalances, competitive dollar, impact on euro economies, EMU institutions.
    Subjects for non-EU documents: EU policies and themes > External relations > international economy
    EU policies and themes > External relations > EU-US
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > University of Miami, Florida-EU Center of Excellence > EUMA Papers Series
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 04 Sep 2008
    Page Range: p. 14
    Last Modified: 15 Feb 2011 17:52

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