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EMU Enlargement, Policy Uncertainty and Economic Reforms

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  • Carsten Hefeker

Abstract

The paper analyzes the relation between monetary uncertainty and government incentives to implement economic reforms that reduce structural distortions and make economies more flexible. It is shown that uncertainty about the central bank’s reaction function leads to more reforms. I relate this result to the debate about central bank setup in a larger monetary union.

Suggested Citation

  • Carsten Hefeker, 2006. "EMU Enlargement, Policy Uncertainty and Economic Reforms," CESifo Working Paper Series 1767, CESifo.
    • Handle: RePEc:ces:ceswps:_1767
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp1767.pdf
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    References listed on IDEAS

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    19. Carsten Hefeker, 2000. "Structural Reforms and the Enlargement of Monetary Union," CESifo Working Paper Series 270, CESifo.
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    Cited by:

    1. Dai, Meixing & Sidiropoulos, Moise, 2008. "Fiscal Policy in a Monetary Union in the Presence of Uncertainty about the Central Bank Preferences," MPRA Paper 13907, University Library of Munich, Germany, revised Mar 2009.
    2. Hefeker, Carsten & Neugart, Michael, 2010. "Labor market regulation and the legal system," International Review of Law and Economics, Elsevier, vol. 30(3), pages 218-225, September.
    3. Vassilis Monastiriotis & Sotirios Zartaloudis, 2010. "Beyond the crisis: EMU and labour market reform pressures in good and bad times," LEQS – LSE 'Europe in Question' Discussion Paper Series 23, European Institute, LSE.
    4. Marcelo Sánchez, 2012. "Structural Reform and Transparency in a Monetary Union," Open Economies Review, Springer, vol. 23(3), pages 559-577, July.
    5. Zemanek, Holger, 2009. "Country Size and Labor Market Flexibility in the European Monetary Union: Why Small Countries Have more Flexible Labor Markets," MPRA Paper 16482, University Library of Munich, Germany.
    6. Carsten Hefeker, 2006. "The monetary policy consequences of enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(04), pages 29-34, December.

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    More about this item

    Keywords

    transparency of monetary policy; ECB voting structure; European Monetary Union; optimal representation; labor market regulation;
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