• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Discuss the extent to which membership of the Euro zone is beneficial to an individual country's macroeconomic performance.

Extracts from this document...

Introduction

Discuss the extent to which membership of the Euro zone is beneficial to an individual country's macroeconomic performance (20) The eurozone is a region in which all countries are operating at the same currency, the Euro. Membership for the Eurozone can be beneficial to a country macro economics perspective to an extent. It will reduce transaction costs, this would mean that there are no costs for converting currencies; therefore this will benefit Tourists as they will be getting a higher return on the money they wish to convert. Also benefit businesses who trade in the eurozone as it eliminates Exchange rate uncertainty, as the exchange rate fluctuations will not be able to affect firms profit margin ratios, this will in the long run lead to greater confidence for businesses and lead to greater trade increasing a countries balance of payments position. ...read more.

Middle

And the ECB aim is to keep inflation low as it will help countries have a low inflation rate. Operating the same currency can benefit a countries foreign direct investment, as I mentioned earlier traction cost will be reduced. Therefore it could lead to a better position in a countries balance of payments. It will also help a countries increase it's economic sovereignty within the eurozone and other nations due to the increase in power it will receive from being in a single currency, as other nations will see potential in a larger market. Many sectors in the economy will benefit such as the financial sector, as it will be easier to trade shares on the stock market, as it will be easier to trade German shares on the London stock exchange. ...read more.

Conclusion

A significant disadvantage of joining the euro is that it will mean that countries lose Macroeconomic sovereignty, as countries will not be able to set interest rates and also exchange rates, however you could argue this will benefit some nations who experience high inflation rates. To conclude membership of the euro will bring many benefits, and disagreements. However I recommend that in the near future we do have a single currency proving many countries are operating at similar stages within the economic cycle. As the single currency should increase FDI, and improve BOP position, however in order for this to occur countries need to be operating at similar stages in terms of the economic cycle. It should also increase a countries economic influence in the world which should decrease volatility of the euro and in the long term lead to greater external trade ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    The euro has many effects on businesses and the consumers not only within the ...

    4 star(s)

    This may lead to better decision making for its companies. If UK companies purchase products priced in euro the exchange rate risk may be transferred to them. It is possible that some domestic UK businesses which do not currently experience exchange rate risk will do so in future.

  2. Advantages and diasadvantages of joining the Euro

    Currencies, sterling and euro would be used for 2 months after this date before the euro is solely used. After the two months the sterling would become extinct. It would be withdrawn from circulation. And euro would now be the only legal tender.

  1. Generalized role of a purchase manager

    Although low-end work, such as maintenance of legacy systems or projects associated with the millennium bug (Y2K) and euro conversion accounted for about 20 percent of export revenues in 2000, the Indian industry has moved up the technology ladder over time.

  2. International Trade - I have been asked to investigate the possibility of a company ...

    The higher price reduces consumer demand and thus effectively restricts the import. The taxes collected on the imported goods also increase revenues for the nation's government. Furthermore, tariffs serve as a subsidy to domestic producers of the items so taxed; the higher price that results when a tariff is imposed encourages the competing domestic industry to expand production.

  1. Economical arguments for the euro.

    of sustained economic growth and stability, which has been achieved by being able to adopt the economic policies appropriate to her circumstances. In particular, the setting of interest rates to a level appropriate to each phase of the economic cycle have imposed the necessary brake or impetus to keep the economy on track.

  2. Emergency Economic Recovery Program From the United Nations International Report, Vol. I, no. A1

    Technical assistance would be provided to help strengthen institutional capacity at the local government level. III Transport Inter-city Roads a) Statement of the Problem Haitian roads (4,545 km in total) are in poor condition. Eighty percent of the paved roads and 96 percent of the remaining primary roads require repair or rehabilitation, thereby increasing vehicle operating costs.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work