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The role of money and monetary policy of the central bank in pursuing macroeconomic stability has significantly changed over the period since the end of World War II. Globalization, liberalization, integration, and transition processes generally shaped the crucial milestones of the macroeconomic development and substantial features of economic policy and its framework in Europe. Policy-driven changes together with variety of exogenous shocks significantly affected the key features of macroeconomic environment on the European continent that fashioned the framework and design of monetary policies.

This chapter examines the key basis of the central bank’s monetary policy on its way to pursue and preserve the internal and external stability of the purchasing power of money. Substantial elements of the monetary policy like objectives and strategies are not only generally introduced but also critically discussed according to their accuracy, suitability, and reliability in the changing macroeconomic conditions. Brief overview of the Eurozone common monetary policy milestones and the past Eastern bloc countries’ experience with a variety of exchange rate regimes provides interesting empirical evidence on origins and implications of vital changes in the monetary policy conduction in Europe and the Eurozone.

The popularity of arms embargoes makes sense on the one hand but can be puzzling on the other. Since arms are a type of good often linked directly to war and peace as one of the central objects of international politics, stemming the flow of arms to a country or group accused of acting against international peace and security is a logical response. However, while this reaction is frequent, it is not generally regarded as being effective. In fact, arms embargoes have a reputation of not functioning well. One can find many references, in academic literature and policy papers alike, which state that arms embargoes “do not work” that they are “ineffective” or that they are “not worth the paper they are printed on.” The paradox that sanctions are deemed to be of little consequence but are still popular among policy-makers (Baldwin, 1997) is particularly striking.

The dependent variables for this analysis include three measures of arms embargo effectiveness, which were referred to as ‘levels of effectiveness’ in the Framework Chapter. These are the embargo's success in causing a targeted policy change (level I effectiveness), success in changing arms flow to the target (level II effectiveness), and a measure of effectiveness to capture the arms embargo initiators satisfaction with the operation of the embargo (level III effectiveness).