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Costs and benefits compared
- What is the Keynesian view of the costs and benefits of a monetary union? What is the monetarist view?
- Explain why the Keynesian view is pessimistic about the prospects of a monetary union and why the monetarist view is optimistic. What is your view on this issue?
- Why did monetary union become popular in Europe during the 1980s and 1990s?
- Explain why an increase in the asymmetry of shocks must lead to more labour market flexibility to make a monetary union attractive to its members.
- Explain what the implications are of the trade-off between insurance (budgetary union) and flexibility.
- Why is it unlikely that the EU-28 is an optimal currency area?
- Could your conclusion that the EU-28 is not an optimal currency area change in the future? What does it depend on?
- Is there much evidence in favour of the endogeneity hypothesis of a monetary union?
- An increase in economic integration can also lead to an increase in the asymmetric shocks. This could make a monetary union less attractive. Do you think this is a serious obstacle to a monetary union?