The EMS, Spain and macroeconomic policy

Abstract

This paper explicitly focusses on the issue of Spanish participation in the EMS, and tries to answer the following questions: why could it be in the interest of Spain to belong to the EMS?; what preconditions should be satisfied by the Spanish economy for a smooth entrance into the System?, and, what are the main economic policy changes that are likely to occur as a result of Spain's membership?. The paper identifies and analyzes the main relative advantages for Spain of EMS participation, the timing and conditions of Spanish integration and analyzes how should monetary and fiscal policy be changed to achieve stability of the peseta exchange rate inside the EMS.