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Why EMU is Irrelevant for the German Economy

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  • Adam S. Posen

    (Peterson Institute for International Economics)

Abstract

It is ironic that Germany's next great change in monetary regime comes just after the time of the fiftieth anniversary of the currency reform, which gave the world the deutsche mark. Discussions of European monetary unification and the replacement of the DM with the euro take on a special meaning in this context. Even though the euro's literal arrival has now come and gone, many Germans still discuss the matter with some urgency. Roughly speaking, there are two camps: those who see the euro as the advent of a newly open, large, and efficient regime which will lead to improvements in European and in particular German economic competitiveness; and those who see the euro as a weakening of the commitment to price stability upon which the German Wirschaftswunder was based. An outside perspective from an American monetary economist, albeit one versed in German monetary policy is that EMU is unlikely to cause directly any meaningful change either for the better in Standort Deutschland or for the worse in German price stability. In short, EMU is irrelevant for the German Economy.

Suggested Citation

  • Adam S. Posen, 1999. "Why EMU is Irrelevant for the German Economy," Working Paper Series WP99-5, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp99-5
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    Cited by:

    1. Adam S. Posen & Daniel Popov Gould, 2007. "Has EMU Had Any Impact on the Degree of Wage Restraint?," Palgrave Macmillan Books, in: David Cobham (ed.), The Travails of the Eurozone, chapter 7, pages 146-178, Palgrave Macmillan.
    2. Oliver Holtemöller & Götz Zeddies, 2013. "Has the Euro increased international price elasticities?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(1), pages 197-214, February.

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance

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