Economic Implications of the EU's Single Currency on German Economy Dissertation

Economic Implications of the EU's Single Currency on German Economy - Dissertation Example Methodology 3.1 Research approach and technique ----------------------------------------------------26 3.2 Sources and collection of data --------------------------------------------------------27 3.3 Data analysis ----------------------------------------------------------------------------28 3.4 Ethics in research------------------------------------------------------------------------28 3.5 Research limitations---------------------------------------------------------------------29 3.6 Credibility and verification ------------------------------------------------------------30 4. Results from macroeconomic data 4.1 German economy after the adoption of euro--------------------------------------32 4.2 Current effect on Germany----------------------------------------------------------32 4.3 Understanding the macro level effects on the economy-------------------------34 5. Discussion----------------------------------------------------------------------------------46 6. ... Germany is considered to be a very strong economy and its economic performance has been remarkable. The adoption of euro as the single currency has been an important event. The adoption of this policy was thought to bring about favorable changes to employment, growth and budget allocation but it was seen that since the adoption of the above stated policy the country had faced serious problems and that has been shown with the help of various macroeconomic indicators like unemployment, Gross Domestic Product, Inflation, and Gross Fixed Capital Formation (Hishow, 2007, p.3). CHAPTER 1: INTRODUCTION Economic and monetary union was suggested by the European Commission in the year 1998. They had predicted that this would encourage more investment, help increase competition, rejuvenate the European economy and the single market, and benefit the population of Europe with respect to their work and travel requirements. Some of the greatest arguments in favor of the single currency move were th at, it would result in integration of the markets of Europe and the removal of uncertainties that result from an unpredicted exchange rate. It was also expected to increase the mobility of capital and induce transparent pricing. The European Commission carried out a research and came out with estimation that 0.33 percent of European GDP was lost in the process of conversion of currency or as transaction costs. A traveler in Europe could have spent nothing but still would have lost a significant amount of money by only changing currencies. The system was seen as one which would introduce lesser volatile interest rates, thereby supporting low inflation and higher growth. Optimists believed that the Euro would reach the same state as of the Dollar and share the spotlight. It would make