Inequality in the Eurozone
ECO2096 – Applied Economics
Inequality in the Eurozone
Myles Oates – 102674725
Contents
Page 2 – The Eurozone
Page 3 - Single Currency
Page 4 – Single Currency
Page 5 – Inequality Within Eurozone Countries
Page 7 – Inequality Throughout the Eurozone
Page 9 – Reasons for Inequality
Page 10 – Reducing Inequality
Page 11 - Conclusion
ECO 2096 – Report on Inequality in the Eurozone.
The Eurozone
The Eurozone is an Economic and Monetary Union of initially 11 EU member states in 1999, since then more countries have joined and the number of members has increased to 17. It now consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal Slovakia, Slovenia and Spain. To join they needed to adhere to the Maastricht criteria. The conditions of these were:
1. To have controlled inflation by having an inflation rate no higher than 1.5% above an average of the three lowest inflation rates of EU member states.
2. Government debt to be no higher than 60% of GDP.
3. An interest rate no higher than 2% above the 3 lowest inflation member states.
4. A stable exchange rate under the Exchange rate mechanism meaning their currency did not fluctuate too greatly relative to other European currencies.
5. Government deficit to be no higher than 3% of GDP for the preceding fiscal year.
These criteria were introduced in an attempt to make the prospective Eurozone an optimum currency area, which is ‘an economic unit composed if regions affected symmetrically by disturbances and between which labour and other factors of production flow freely’. (Eichengreen, 1998) Arguably, the Eurozone is an optimum currency area, through the efforts of many integration policies such as the Single European Act, and the free movement of workers becoming a fundamental right in the EU allowing both free trade and mobility of
Inequality in the Eurozone
Myles Oates – 102674725
Contents
Page 2 – The Eurozone
Page 3 - Single Currency
Page 4 – Single Currency
Page 5 – Inequality Within Eurozone Countries
Page 7 – Inequality Throughout the Eurozone
Page 9 – Reasons for Inequality
Page 10 – Reducing Inequality
Page 11 - Conclusion
ECO 2096 – Report on Inequality in the Eurozone.
The Eurozone
The Eurozone is an Economic and Monetary Union of initially 11 EU member states in 1999, since then more countries have joined and the number of members has increased to 17. It now consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal Slovakia, Slovenia and Spain. To join they needed to adhere to the Maastricht criteria. The conditions of these were:
1. To have controlled inflation by having an inflation rate no higher than 1.5% above an average of the three lowest inflation rates of EU member states.
2. Government debt to be no higher than 60% of GDP.
3. An interest rate no higher than 2% above the 3 lowest inflation member states.
4. A stable exchange rate under the Exchange rate mechanism meaning their currency did not fluctuate too greatly relative to other European currencies.
5. Government deficit to be no higher than 3% of GDP for the preceding fiscal year.
These criteria were introduced in an attempt to make the prospective Eurozone an optimum currency area, which is ‘an economic unit composed if regions affected symmetrically by disturbances and between which labour and other factors of production flow freely’. (Eichengreen, 1998) Arguably, the Eurozone is an optimum currency area, through the efforts of many integration policies such as the Single European Act, and the free movement of workers becoming a fundamental right in the EU allowing both free trade and mobility of
Bibliography: Bordo and Meissner, 2012, Does Inequality Lead to a Financial Crisis? Eichengreen, 1998, European monetary unification, Massachusetts, MIT press, European Commission, Eurostat, http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tessi190&plugin=0 Accessed 02/04/2012 http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=teilm020&tableSelection=1&plugin=1 Accessed 10/04/2012 OECD Statistics, http://stats.oecd.org/Index.aspx Accessed 10/04/2012 Statistics Portugal, http://www.ine.pt/xportal/xmain?xpid=INE&xpgid=ine_main Accessed 03/04/2012