European Monetary Union Classroom Strategies

By Hirst, Keith | Teaching Business & Economics, Spring 1999 | Go to article overview

European Monetary Union Classroom Strategies


Hirst, Keith, Teaching Business & Economics


'The past is a foreign country. They do things differently there.' L.P Hartley (1953)

What was true for L. P. Hartley in the 1950s is equally fitting for European Union policy makers today, and this observation is clear from Nigel Healey's article. The future is now upon us and European Monetary Union (EMU) has evolved from a theoretical possibility into the central element and driving force of EU economic policy. The whole debate has shifted to a different level, and the article reflects this new reality. It offers an up to date overview of the debate surrounding EMU and provides a range of opportunities for use in the classroom. The intention here is to firstly discuss the possible uses of the article with an A level Economics group.

Secondly, some areas are identified for classroom discussion, Finally a series of tasks are presented in the form of a Student Briefing Sheet which is designed to prepare the ground for a class debate on the subject.

USE OF THE ARTICLE

Nigel Healey provides a clearly structured, informative discussion of the current debate in Britain over EMU. The article is not steeped in the technical jargon which can accompany this issue, and is certainly accessible to a second year A Level group. Teachers may feel content to reproduce the article and allow students to read and analyse independently. The strategies and activities listed below are based upon the article being used in class as stimulus material, to allow the teacher to assess understanding and clarify areas of uncertainty.

With the sphere of influence of EMU so great the article could be employed to good effect towards the end of Year 13 as a source of revision of a range of topics. Links to the syllabus include: The Firm - effects of reduced costs and risk stemming from EMU. Exchange Rate Systems and

Economic Policy.

Monetary Policy - the role of the European Central Bank (ECB). Inflation.

The operation of the Labour Market - the importance of wage flexibility as a counter to an inappropriate interest rate. Clearly such links will allow the application of theoretical economic models (such as AD/AS and the Phillips Curve) to a real life context.

IDEAS FOR DISCUSSION What follows is a brief outline of some of the issues raised in the previous article. Specific ideas for discussion are suggested. BRITAIN'S TRADE WITH THE EU The article describes a number of uncontentious benefits for individuals and businesses that will arise from EMU, namely lower transactions costs and reduced risk.

The emphasis then shifts to trade, with Table 1 providing information of the extent of intra and extra EU trade (as a proportion of GDP). The evidence here suggests that Britain trades less with other EU countries compared to the EU average, with the implication that the potential benefits for Britain of EMU membership might be less. The table should be a good source of discussion and can be used to develop skills in the interpretation of statistics. ) Why might Britain trade relatively less with other EU countries?

=>Which countries have the highest/lowest levels of trade with the EU? Suggestions why?

Students could research how Britain's trade with the EU has changed since, for example, the 1950s, to examine how the pattern of international trade has altered. PRICE DIFFERENCES ACROSS THE EU

Table 2 suggests that Britain may suffer higher absolute product prices (i.e. prices after taxes and exchange rates are taken into account) than some other EU countries. The launch of a single currency will facilitate price comparisons between countries and should lead to some equalisation of prices. Price discrimination and opportunities for profiteering in individual product markets will be reduced. …

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