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Title: EMU and international monetary relations : the political economy of exchange rate policy
Author: Baines, A. C.
Awarding Body: University of Cambridge
Current Institution: University of Cambridge
Date of Award: 2002
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The external dimension of EMU has rarely been afforded a role of central importance in academic or official work. This thesis investigates the impact of EMU on international monetary relations by examining exchange rate policy for the euro and EMU participation in international institutions such as the Group of Seven. As a theoretical background to the analysis of this question, a framework for understanding how industrial states choose which exchange rate policy to pursue is developed. In opposition to traditional 'power' based analyses of international monetary relations such as Hegemonic Stability Theory, a financial structural argument is developed in conjunction with domestic-level analysis to explain policy outcomes. The existence of a financial structure associated with high levels of capital mobility imposes common constraints on industrial states, forcing them to resolve a trade-off between domestic policy autonomy and exchange rate stability. This policy choice is determined by the economic characteristics of the state, the role and organisation of interest groups, policy perspectives of the monetary authorities, and the degree of independence of the central bank. Applying these considerations to the new case of EMU suggests that the exchange rate of the euro will be subject to 'benign neglect', primarily as a result of the high levels of independence of the European Central Bank, but also as a result of the relatively closed nature of the Euroland economy, limited scope for interest group pressure, and complex institutional structures. Concentration on domestic goals and limited interest in the exchange rate, as well as ineffective institutional arrangements for external representation, indicate that international monetary cooperation will not increase, despite the simplification of global monetary politics into an effective Group of Three.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available