Optimal sequencing to reform the European economic and Monetary Union: a roadmap
In this paper, we examine the political gridlock in reforming the Economic and Monetary Union. We utilize a two–stage game with imperfect information in order to study the optimal sequencing. The main results are: first, optimal sequencing requires for incompliant Member States a default option in s...
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| Format: | Article |
| Language: | English |
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AIMS Press
2021-05-01
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| Series: | Quantitative Finance and Economics |
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| Online Access: | https://www.aimspress.com/article/doi/10.3934/QFE.2021014?viewType=HTML |
| _version_ | 1830479589495799808 |
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| author | Bodo Herzog |
| author_facet | Bodo Herzog |
| author_sort | Bodo Herzog |
| collection | DOAJ |
| description | In this paper, we examine the political gridlock in reforming the Economic and Monetary Union. We utilize a two–stage game with imperfect information in order to study the optimal sequencing. The main results are: first, optimal sequencing requires for incompliant Member States a default option in stage–two, which in principle is related to the today's fiscal architecture (EMU-I). Second, we show that compliant countries prefer a reform equilibrium today if and only if they have a free choice about the preferred fiscal architecture at the end — either EMU-II with binding European coordination or EMU-I related to Maastricht. Noteworthy, our sequencing approach works for any design of the EMU-II architecture. |
| first_indexed | 2024-12-21T16:50:00Z |
| format | Article |
| id | doaj.art-031120b7a4624647a78e384b3776b6b7 |
| institution | Directory Open Access Journal |
| issn | 2573-0134 |
| language | English |
| last_indexed | 2024-12-21T16:50:00Z |
| publishDate | 2021-05-01 |
| publisher | AIMS Press |
| record_format | Article |
| series | Quantitative Finance and Economics |
| spelling | doaj.art-031120b7a4624647a78e384b3776b6b72022-12-21T18:56:54ZengAIMS PressQuantitative Finance and Economics2573-01342021-05-015231132410.3934/QFE.2021014Optimal sequencing to reform the European economic and Monetary Union: a roadmapBodo Herzog01. ESB Business School, Department of Economics, Alteburgstr, 150, 72762 Reutlingen, Germany 2. RRI Reutlingen Research Institute, Reutlingen University, Germany 3. IFE Institute of Finance and Economics, ESB Business School, Reutlingen, GermanyIn this paper, we examine the political gridlock in reforming the Economic and Monetary Union. We utilize a two–stage game with imperfect information in order to study the optimal sequencing. The main results are: first, optimal sequencing requires for incompliant Member States a default option in stage–two, which in principle is related to the today's fiscal architecture (EMU-I). Second, we show that compliant countries prefer a reform equilibrium today if and only if they have a free choice about the preferred fiscal architecture at the end — either EMU-II with binding European coordination or EMU-I related to Maastricht. Noteworthy, our sequencing approach works for any design of the EMU-II architecture.https://www.aimspress.com/article/doi/10.3934/QFE.2021014?viewType=HTMLsequencingemufiscal governancemaastrichtreforming |
| spellingShingle | Bodo Herzog Optimal sequencing to reform the European economic and Monetary Union: a roadmap Quantitative Finance and Economics sequencing emu fiscal governance maastricht reforming |
| title | Optimal sequencing to reform the European economic and Monetary Union: a roadmap |
| title_full | Optimal sequencing to reform the European economic and Monetary Union: a roadmap |
| title_fullStr | Optimal sequencing to reform the European economic and Monetary Union: a roadmap |
| title_full_unstemmed | Optimal sequencing to reform the European economic and Monetary Union: a roadmap |
| title_short | Optimal sequencing to reform the European economic and Monetary Union: a roadmap |
| title_sort | optimal sequencing to reform the european economic and monetary union a roadmap |
| topic | sequencing emu fiscal governance maastricht reforming |
| url | https://www.aimspress.com/article/doi/10.3934/QFE.2021014?viewType=HTML |
| work_keys_str_mv | AT bodoherzog optimalsequencingtoreformtheeuropeaneconomicandmonetaryunionaroadmap |