Why EMU is Irrelevant for the German Economy

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Abstract
No one seems to be neutral about the effects of EMU on the German economy. Roughly speaking, there are two camps: those who see the euro as the advent of a newly open, large, and efficient regime which will lead to improvements in European and in particular German competitiveness; those who see the euro as a weakening of the German commitment to price stability. From a broader macroeconomic perspective, however, it is clear that EMU is unlikely to cause directly any meaningful change either for the better in Standort Deutschland or for the worse in German price stability. There is ample evidence that changes in monetary regimes (so long as not exiting hyperinflation) induce little changes in real economic structures such as labor or financial markets. Regional asymmetries of the sort seen in the euro-zone do not tend to translate into monetary differences. Most importantly, there is no good reason to believe that the ECB will behave any differently than the Bundesbank.

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