1

Ch.1: questions

What are the roots of the EU (the background, the motivation, the main objective)?

Main dates of the EU (and why are they main dates, significance)?

Who joined and when?

EU: short definition? EU: elements of a longer definition?

EU = a community of values? (if so, what values)

Is the EU a union of states or of citizens?

What is the basis for the powers of the EU?

EU: economic policy rationale?

2

CH 2: questions Which are the main EU institutions? Characterize briefly the Commission/Council/European Council Why is the Commission fundamentally different from the Council? Why is the European Parliament a strange parliament? Where are the key EU decisions taken physically (location)? Who is the president of the Commission, of the EU, of the ECB, of the

Eurogroup, of the Council and who is the monetary or economic commissioner?

What is the essence of the principle of subsidiarity? At what level is the competence for monetary policy, fiscal policy, social

policy, tax policy, competition and state aid policy? The EU is undemocratic: why? What is the problem with unanimity in decision making, and with less

than unanimity? The voting paradox = ? What is ”horsetrading”; is it bad or good?

3

Ch 3: questions: What are the main monetary regimes that we have experienced in Europe? Explain the gold standard/the Bretton Woods-regime What was the EMS? Many earler monetary regimes have broken down: why? What is the impossible trinity? Why was the EMU set up, political motivations? What are the key elements of the institutional set-up of EMU? Main features of the ECB Is the ECB democratically accountable?

4

Ch 4: questions

Outline the adjustment mechanism in the classical model (price specie flow-mechanism): Assume that a small open economy is hit by an exogenous fall in demand for its exports. What will happen according to the classical model?

What is an asymmetric shock?

The role/importance of wage flexibility in a monetary union

Can the effects of a decline in exports of a member state of the monetary union be mitigated by expansionary fiscal policy?

What is the essence of the credibility doctrine of monetary policy?

5

Ch.5 : questions

What are the main costs of a MU? Under which conditions will the cost of a MU be small (overall or for a particular

member state)? Why are asymmetric shocks an argument for flexible exchange rates? What are the main benefits of a common currency? Why or when is there an inherent tendency towards instability of public finances

(in the light of the proximate determinants of the change in indebtedness)? What is the meaning of multiple equilibria in government bond markets? Being a member of a MU does not only imply giving up your own central bank, it

also restricts the possibilities of fiscal policy; why? What are the conceivable consequences of high leverage of banks? Why do banking problems tend to have negative spillovers?

6

Ch.6: questions

The euro area: what is the problem of heterogeneity? What were the main driving forces creating imbalances during the first

decade of the euro? What were the consequences of the convergence of interest rates to the

German level in Southern Europe for real interest rates, credit expansion, house prices, overall demand growth, wages and unit labor costs, competitiveness, the current account?

What was the relation between the rate of inflation and the real rate of interest?

What happened to unit labor costs in the north and in the south? Did some countries violate the stability and growth pact? What are the two key figures of the stability and growth pact?

7

Ch. 7: questions Why did government bond yields rise starting in 2009 in a

number of euro area countries? What were the main drivers of the debt crisis? What happened in Southern Europ in 2009-2013 to real

interest rates, credit expansion, house prices, domestic demand, wages, unit labor costs, competitiveness, GDP growth, unemployment?

How did the ECB react to the crisis? Did fiscal policy thightning achieve its desired effects in 2009-

2013 in the euro area? Did it reduce budget deficits, reduce public debt/GDP, stimulate growth, add to jobs?

Austerity: blessing or curse?

8

Ch. 8: questions

What are or have been the main means of combating the crisis (another trinity)?

What are the ESM and the EFSF? Which countries have received financial support packages? What are typical elements of an adjustment programme designed by the

troika (and what is the troika)? Why is it so difficult to break the government debt spiral (in the light of its

proximate determinants)? What is the stability and growth pact? How are the fiscal rules strenghtened by the six-pack and the two-pack? What is the ”excessive imbalance procedure”? What is the OMT by the ECB?

9

Ch.9: questions Why are banks a potential source of economic instability, why are banks

prone to ”excessive” risk-taking? Bias towards excessive risk-taking by banks: what costs for society? Why could there be cross-border spillovers related to banking? What is the ”lethal” link between banks and sovereigns? What are the main building blocks of a banking union? How is bank regulation decided upon in Europè? Who is responsible for banking supervision in the euro area? What is meant by bank resolution? Will there be a role for the union level in bank resolution? Deposit insurance in EMU: common or national? Who is ”lender of last resort” in EMU? Is there a ”minimum fiscal backstop”?

10

Ch.10: questions

What is the ”functionalist” or ”neofunctionalist” view of integration?

What is Rodrik’s trilemme?

What could be some elements of a fiscal union?

What could a political union for the euro area looka like (institutionally)?

Enumerat the main problems of an exit (such as ”Fixit” or ”Grexit”) from the euro

Why may EMU now be seen as a problem for the Finnish economy?