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Choosing the Regime: Macroeconomic Effects of UK Entry into EMU
Author(s) -
Barrell Ray,
Dury Karen
Publication year - 2000
Publication title -
jcms: journal of common market studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.54
H-Index - 90
eISSN - 1468-5965
pISSN - 0021-9886
DOI - 10.1111/1468-5965.00257
Subject(s) - economics , inflation (cosmology) , oil price , price of stability , monetary economics , macroeconomics , german , macro , keynesian economics , price level , monetary policy , supply shock , international economics , physics , archaeology , theoretical physics , computer science , history , programming language
The UK's decision on EMU membership depends in part on its effects on the economy. The UK targets inflation, and this involves some ‘price level drift’, whilst the ECB emphasizes price stability and would plan to reverse the drift in the price level caused by external shocks such as an increase in the oil price. We discuss the foundations of the ECB policy in German Ordoliberalism. The regimes are then compared over the future using a large macro model (NiGEM) which includes descriptions of all the European economies. It is repeatedly subject to historically representative shocks. The effects of these shocks are compared with the UK in and out of EMU.