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The position of the European System of Central Banks (ESCB) is an important issue in the process towards European economic and monetary union (EMU). At the December 1991 meeting in Maastricht, the European council decided that the primary objective of the ESCB shall be to maintain price stability. This paper explores the influence of central bank independence on the level and variability of inflation, the level and financing of government budget deficits, and on economic growth.   JEL: E58

The Republic of Serbia has successfully completed the first part in the European Union integration process, being granted candidate status for membership in the European Union (EU). The stage of accession negotiations is in progress, and it includes the full harmonization with the EU acquis, whereby the analytical review of legislation, the so-called screening is being carried out in 35 chapters. The global financial crisis that affected our country in 2008 has required a timely reaction of the National Bank of Serbia (NBS) in order to preserve the financial system stability, especially the banking sector as its most important segment. As the financial services sector adjusts within chapter 9, the aim of this paper is to assess the level of compliance of national legislation with the EU legislation regarding banking sector. Along with the regulatory initiatives in the field of preserving financial stability in the EU countries, the NBS has paid great attention to the harmonization of its financial stability policy with the financial stability policy of the European System of Central Banks (ESCB).

This paper presents estimates based on individual data of downward nominal and real wage rigidities for 13 sectors in Belgium, Denmark, Spain, and Portugal. Our methodology follows the approach recently developed for the International Wage Flexibility Project, whereby resistance to nominal and real wage cuts is measured through departures of observed individual wage change histograms from an estimated counterfactual wage change distribution that would have prevailed in the absence of rigidity. Our estimates of wage rigidities are set against structural features of the labour markets studied, including the wage bargaining level and the degree of product market competition.

This paper documents the existence and main patterns of inter-industry wage differentials across a large number of industries for eight EU countries at two points in time (in general 1995 and 2002) and explores possible explanations for these patterns. The analysis uses the European Structure of Earnings Survey, an internationally harmonised matched employer-employee data set, to estimate industry wage differentials conditional on a rich set of employee, employer, and job characteristics. After investigating the possibility that unobservable employee characteristics lie behind conditional wage differentials, a hypothesis which cannot be accepted, the paper investigates the role of institutional, industry structure, and industry performance characteristics in explaining industry wage differentials. The results suggest that inter-industry wage differentials could reflect efficiency wages or rent-sharing mechanisms and that rent-sharing is more likely in industries with firm-level collective agreements and with higher-collective agreement coverage.

Based on an ad hoc firm-level survey on wage and pricing policies conducted in a large number of European countries, this study finds that about 60% of firms change base wages once a year with some clustering of wage changes observed in January. Differences in the frequency of wage changes between firms are mainly attributable to the institutional framework of the labor market in which they operate. There is evidence of both nominal and real downward wage rigidity. Moreover, when facing a negative shock, European firms prefer to reduce the amount of labor rather than cutting wages. Among those that decide to cut wages a majority prefers to cut flexible wage components rather than base wages. The rigidity of base wages is largely explained by fairness and efficiency considerations.

This paper investigates the macroeconomic relevance of new findings regarding nominal wage stickiness, wage indexation, wage staggering and synchronisation, and downward nominal and real wage rigidity in the euro area. Quantifying the relevance of this evidence for monetary policy remains to be fully resolved, but our results suggest that countries with lower indexation and higher wage stickiness for newly hired workers experience higher employment volatility and lower inflation volatility, and that wage staggering and synchronisation of wage changes in particular months result in less persistence in real wages and inflation.

Each country's monetary standard corresponded to a fixed weight of gold. The exchange rate between two currencies was determined by the weight of each currency in gold and remained stable, within narrow limits, called the “gold points”. The International Monetary Fund (IMF) was established on 27 December 1945 to promote international monetary cooperation, ensure exchange stability, facilitate the expansion and balanced growth of international trade, contribute to a high level of employment, economic stability and reduce poverty. The European Monetary Institute (EMI) was responsible for strengthening coordination between central banks and preparing for the creation of the European System of Central Banks (ESCB). It carried out simulations of systems and procedures during the second quarter of 1998 on monetary and exchange rate relations between the euro zone and the other countries of the Economic Union, within the deadlines that had been set.

From the individual's perspective, the outward mobility of the Euro in the European Community is not judicially as strongly guaranteed as one would have expected. Restrictions on capital movements are possible only in certain circumstances and they are justiciable by the Court of Justice. But on the other hand, restrictions on the movement of capital and payments to third countries can be adopted even on political and non-economic grounds, and these grounds are not justiciable. What is also not protected is the individual's personal economic position which may be detrimentally affected by any restriction on the flow of the Euro to third countries. The exercise of monetary sovereignty in this respect is so narrowly defined and split-up in such idiosyncratic detail that one is not sure whether the possibility of judicial scrutiny should be regarded as an advantage or not.The currency constitution points clearly to an internationally free circulating currency protected in its external value against arbitrary and sudden changes and which qualities are judicially protected.