Leadership and Cooperation in the European Monetary System

Download or read book Leadership and Cooperation in the European Monetary System written by Nouriel Roubini and published by . This book was released on 2007 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: To assess the importance of economic interdependence and the potential gains from policy coordination in the European area, this paper analyzes the international transmission of policies and disturbances in a rational expectation dynamic general equilibrium simulation model of the work economy, and applies the analysis to the study of the European Monetary System. International spillover effects and potential gains from coordination appear to be small under the assumption of flexible exchange rates in the European area. The implications of a fixed rate EMS with German leadership are compared with those of a cooperative fixed exchange rate regime. Finally, capital controls under fixed rates fails to insure policy autonomy and insulation from external disturbances for the countries restricting the capital movements.