School of Business

An Evaluation of Progress Toward European Monetary Union Using Fuzzy Analysis

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Description: European Monetary Union (EMU) is scheduled to commence by the end of the century. Currently, Europeans are engaged in a grand debate over EMU. The controversy is not only over the timetable and stringency of criteria for macroeconomic convergence between member countries, but also over the desirability of the whole EMU enterprise. The European Union (EU) has three choices, to abandon the idea of EMU and opt for independent national monetary policy for each member, to venture the unknown by adopting the EMU regardless of the conditions of its members, or to measure and monitor the fulfillment of EMU preconditions carefully and take the final step when there is a consensus that convergence is reasonably attained. Our paper is a contribution to a systematic quantification and measurement of the fulfillment of the EMU preconditions. We provide a general framework for policy evaluation based on fuzzy logic. We use fuzzy analysis to assess the degree to which each goal is attained, to evaluate the performance of different countries, and to determine the overall progress of the EU in meeting the Maastricht criteria.
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