Out in the Sunshine? Outsiders, Insiders, and The United States in 1998

Abstract

We address the issue of the optimal size of the European currency union and intra-European Union exchange rate regime, focusing on the interactions among fiscal and monetary authorities in Europe, and between Europe and the rest of the world. Explicitly acknowledging the presence of the rest of the world—which, for simplicity, we call the United States—is essential to understanding the incentives and behavior of policy makers in and outside Europe.