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Questions whether the planned European Monetary Union is capable of solving the social economic challenges of our time. Examines the economic and financial history of modern times; explains the formulation of the impossibility theorem in practice, suggesting the equation of unified knowledge as a solution to the problem of economic calculation; and constructs a plan for a free and stable European Monetary and Economic Union. Looks at the provisions of the Maastricht Treaty (1992) questioning its ability to solve the basic problems of the member states of the European Union. Addresses a number of issues contained within the Treaty: acceptable socially beneficial goals; unacceptable socially harmful, adverse anti‐equilibrium means, policies, reforms and regulations; and the phenomenon of physics’ ‘chain reaction’ within economics. Gives a synopsis of anti‐equilibrium elements and forces in the Treaty of Maastricht, debating what needs to be done to ensure that European Monetary and Economic Union can become an immediate and lasting success.

Explores how European monetary systems have become an heterogeneous conglomerate with the passing of time, questioning the failures of the modern gold standard and the international monetary fund. Asks what kind of monetary and economic union is desirable, examining the choice in terms of the monetary and economic systems. Offers practical measures for the realization of a free and stable monetary and economic union which can be taken at community and national levels. Concludes with an examination of the problems of the accumulated US dollar in European central banks.

The focus of this paper is the economic theory of the plans for the European Monetary Union. Part 1 demonstrates that economists, bankers and policy makers know very little about monetary policy. Part 2 explains the errors of the common practice of defining money by its functions. Because any monetary policy must rest on a definition of money it seems reasonable to conclude that a flawed definition might lead to problems with monetary policy. Part 3 applies this insight to the plans for a common currency in Europe. Because of uncertainties about the timing and details of the implementation, some important considerations are necessarily speculative. They are relegated to appendices. Appendix 1 comments on the timing and authorship and responsibility for the official reports with their unspecified authors. Appendix 2 supplies some grounds for doubting the ultimate durability of the European Monetary Union focusing on reasons that are historical, economic and pragmatic. Because the entire movement is driven by politics, not economics, Appendix 3 considers some of the relevant political issues. The conclusions summarize and speculate on possible reasons for successful outcomes.

Discusses the difficulties that lie in the way of moves towards monetary union in the European Community: convergence criteria, attitudes towards various forms of possible political union, German unification, the location and independence of an independent European Central Bank, “cohesion” provisions in the Maastricht Treaty, and the Delors Budget.

EU social policy is perhaps the most controversial aspect of European integration yet, despite all the political clashes on the matter, concepts like “social Europe” or “social dimension” remain ill‐defined and imprecise terms. Intends to outline and clarify in detail the debate about whether or not the European Union should have competence with regard to labour market affairs. A key message is that social policy has been controversial because it has become embroiled in the debate about the future political direction of the EU. In particular, three contrasting political models –symbiotic integration, integrative federalism and neo‐liberalism – have been put forward as organizing principles for the EU and each has a coherent view of what form social policy should take at the European level. It is the clash between these three models that has caused EU social policy to be so contestable and intractable.

This study aims to research the effects of unemployment wages current account and consumer price index (CPI) on the real gross domestic product (RGDP), which, in the optimum currency area (OCA) theory, supposes that countries with higher factor mobility can significantly profit from the currency area. However, in this study, it is shown that the considered optimum currency crisis (OCC) model is affected by mobility factors, as the defined theory has not been perfectly realised in the Eurozone.

In this study, Breusch–Pagan–Godfrey and Lagrange multiplier (LM) tests are used for supporting the survey for better estimation of the panel cointegration tests, where Pedroni's (1995, 1997) technique is used. The unit root tests are employed, of which the Phillip–Perron and augmented Dickey–Fuller tests (unit root test, Dickey, D. and W. Fuller, 1979) are considered.

It can be concluded that demand shocks will tend to be more asymmetric instead of being symmetric, even though they are in the customs union (CU). However, Polish workers in a given scenario may move to Germany, but because of the rigidity of the labour market and qualification differences between workers, the interregional integration of member countries is reduced, and this reduces the absorption of asymmetric shocks. In Germany, where strong employment protection and rigidity are observed in comparison to Poland, although there has been historical migration and economical collaboration, unfortunately, the integration of the two countries’ economies has not been realised.

Quantitative research on fiscal union and the estimation of its effects is not possible because there is no practical experience of fiscal union throughout the European Union (EU). However, quantitative research is used for estimating the effects of OCA in the Eurozone. Quantitative investigation is particularly focused on the monetary union and single currency and its impact on growth rate. In this study, the ordinary least squares (OLS) method and panel cointegration test are employed for estimating the effects of the considered variables.

The Eurozone and the application of a single currency throughout the EU was a considerably difficult task. In addition, the adoption of a single currency was not easy for those member countries that fulfilled the “convergence criteria” (or “Maastricht criteria”) and who joined the Eurozone, because only adoption is not enough; maintenance of those criteria is also required. This study analysed the application of the Eurozone in the light of the OCA of Mundel's theory.

The OCA is important for member countries’ economic relations. However, the application of a single currency is not easy and needs to be controlled and regulated to ensure best practises throughout the Eurozone. Monetary integration is not a simple process, and Eurozone countries’ financial difficulties affect each other’s markets’ indifferent aspects. Particularly in any market recession, demand shocks tend to have different effects. Furthermore, in comparison to the monetary union, the CU has a considerable impact on trade enlargement.

In this study, the effects of the independent variables “wages, unemployment, CPI and capital flow” on the dependent variable “RGDP” is considered, which, in the OCA theory, supposes that countries with higher factor mobility can significantly profit from the currency area. In application, it was turned into crisis because of inadequate monetary and fiscal application. In this paper OCA is questioned in the light of the Eurozone for bringing better understanding to these difficulties. The considered model and estimations are used for evaluating to create sustainable monetary integration for economic growth.

In late July 1993, the European Monetary System threatened to unravel. The Exchange Rate Mechanism (ERM), which ties European Community members′ currencies together, faced the possibility of collapse as the French franc and other currencies pushed perilously close to the permissible bounds of fluctuation despite massive intervention by central banks. Similar conditions had forced the British pound sterling and Italian lira out of the ERM in September 1992. The short‐term resolution of the crisis was the decision to widen the permissible bounds of fluctuation. Examines the events leading to the ERM crisis, and the implications of the crisis and its resolution on the future of European economic integration are also examined. Finally, discusses the likely future of European economic and monetary union given the current economic and political climate of member countries.

Monetary unification within Europe appears to be on target. Eleven nations pegged their currency to the euro in 1999. The euro‐zone is experiencing varying levels of growth related to GDP. Balancing policy for 11 nations will be difficult. The true test will take place when asymmetric shocks hit one or several of the nations and unemployment rises to unmanageable levels forcing the European Union and European Central Bank to make tough decisions. Cultural issues and national identities are ever present. Optimum currency areas and comparative advantage discussed. The paper is divided into four major sections – reasons for unification, benefits, issues and conclusion.

Assesses whether the current pattern of relative wage rigidity and labour inertia in Europe is a problematic factor in the successful functioning of the European monetary union as viewed by many observers given the absence of interregional fiscal transfer payments.

Uses econometric methods to test whether the onset of monetary integration in the US and the gold standard in selected countries has increased the pro‐cyclical behaviour of real wages.

Finds suggestive empirical evidence that indeed a Lucas Critique argument applies such that credibly fixed exchange rate regimes might induce wages to carry the burden of macroeconomic adjustment in lieu of independent monetary policy and/or fiscal transfers.

Makes a novel contribution to the literature by attempting to test for the existence of endogenous adjustment mechanisms based on historical monetary unions analogous to EMU.

Gulf Cooperation Council (GCC) was set up in 1981 between Bahrain, Oman, Qatar, Saudi Arabia, United Arab Emirates and Kuwait for strengthening cooperation and economic development in the region. The GCC has made strides towards economic consolidation by forming a customs union and a common market. The long-term vision is to create an Economic and Monetary Union (EMU) with a single currency. Progress towards the EMU has been slow and the recent oil price plunge has led to concerns regarding sustainable growth of member countries due to their significant dependence on oil and lack of diversification. The purpose of this paper is to analyse the scope of an EMU in the GCC against the backdrop of current oil crisis and examine sustainability of such a union. The paper studies convergence criteria similar to the ones followed by the accession countries of the European EMU in the 1990s preceding the introduction of the single currency Euro.

The paper draws its practical approach from the experience of the European Monetary Union, though the original idea of the single currency in Optimum Currency Areas was conceived by Mundell (1961). The present paper analyses macroeconomic time-series variables (e.g. GDP, budget deficits, debt, growth rates, inflation rates, exchange rates) for GCC during the period 2005-2014. Data has been sourced from United Nations Conference on Trade and Development (UNCTAD), The World Bank and International Monetary Fund (IMF) databases to study the convergence criteria adopted by the EMU countries for the introduction of the Euro.

The paper concludes that GCC economies are similar in terms of their structural and economic fundamentals. Most elements of the convergence criteria that were followed by the accession countries in Europe are fulfilled by the GCC member states, particularly during 2011-2014. The GCC states look similar in terms of sustainable growth, price stability and exchange rate stability – three aspects of convergence met by the European Union states. However, heavy dependence on oil and lack of diversification from oil and hydrocarbon-related products in the gross domestic product (GDP) composition of GCC states pose severe risks to the potential union. Fiscal vulnerabilities of these economies to oil price shocks, such as the current oil price crisis, create concerns for such a union during oil price lows. Widely divergent fiscal deficit-to-GDP ratios and rising debt-to-GDP ratios during periods of low oil prices imply the lack of sound and unsustainable public finances for some of the GCC states. The divergence has stemmed from widely different break-even oil prices for government budgets within the GCC and also due to varying degrees of oil dependencies between the member states. The scope of a successful and more sustainable EMU can be further explored once the GCC economics have achieved adequate diversity from oil.

The study is useful to policy makers, central banks, businesses and researchers since it highlights the EMU as a feasible option for the GCC states. The sustainability of the EMU is contingent on diversification of these economies in the future from oil and oil-related products. The study can be utilized by policy makers as a strategy to further restructure GCC economies towards greater resilience and integration prior to accession to the GCC EMU.