Essays on euro area enlargement

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en
dc.contributor.author Henriksson, Marketta
dc.date.accessioned 2013-11-26T10:50:59Z
dc.date.available 2013-11-26T10:50:59Z
dc.date.issued 2006
dc.identifier.isbn 951-791-988-3
dc.identifier.issn 1237-556X
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/11484
dc.description.abstract This dissertation examines issues related to the adoption of the euro by the new Central and Eastern European EU Member States. The first essay studies the interaction between fiscal policy and the price level in different exchange rate regimes. The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL). The results show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, which implies that fiscal discipline is a prerequisite for successful participation in the exchange rate mechanism ERM II, while countries unable to commit to sound ?scal policies, probably should not commit to a fixed exchange rate either. Paradoxically, adoption of the common currency enables a country to conduct irresponsible policies, with the result that a rise in the debt level of one country raises the common price level of the monetary union. In the second essay, a small open economy model is constructed, which allows the examination of the effects of Balassa-Samuelson-type growth - i.e. faster productivity growth in the traded goods sector than in the non-traded goods sector - in an intertemporal fixed exchange rate framework with a focus on the external balance, which has gained less attention in earlier research. The numerical simulations imply that the Balassa-Samuelson e¤ect may increase the vulnerability of the economy. However, trade account deficits would appear to be a temporary phenomenon, as the deficits are decreased by the natural shift in the composition of consumption towards non-traded goods that is characteristic of catch-up. The focus of the third essay is the effects of the EU fiscal policy rules on the fiscal variables, namely deficit and debt, and the external balance in the new Member States participating in ERM II. The numerical simulations show that a fiscal rule based on debt may be better at providing stability into the economy, while a deficit rule implies a smoother response to a transitory increase in output. External imbalances appear to be a natural part of the convergence process, which cannot be eliminated through the use of fiscal rules alone en
dc.format.extent 110 s.
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.publisher Helsinki School of Economics en
dc.publisher Helsingin kauppakorkeakoulu fi
dc.relation.ispartofseries Acta Universitatis oeconomicae Helsingiensis. A fi
dc.relation.ispartofseries 266 fi
dc.title Essays on euro area enlargement en
dc.type G5 Artikkeliväitöskirja fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.identifier.urn URN:ISBN:951-791-988-3
dc.type.dcmitype text en
dc.programme.major Kansantaloustiede fi
dc.programme.major Economics en
dc.type.ontasot Väitöskirja (artikkeli) fi
dc.type.ontasot Doctoral dissertation (article-based) en
dc.contributor.supervisor Haaparanta, Pertti, professor
dc.opn Kilponen, Juha, doctor, Bank of Finland, Finland
dc.subject.helecon Rahapolitiikka
dc.subject.helecon Euro
dc.subject.helecon EU
dc.subject.helecon Integraatio
dc.subject.helecon Siirtymätalous
dc.subject.helecon Keski- ja Itä-Eurooppa
dc.subject.helecon Monetary policy
dc.subject.helecon Integration
dc.subject.helecon Transition economy
dc.subject.helecon Central and Eastern Europe
dc.date.defence 2006-02-17
dc.dissid 296
dc.identifier.bibid 328475


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