The paradox of success: the roll of capital markets in determining British policy toward the European common currency, 1979-1996
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That Britain, one of Europe's largest economies, has opted not to adopt the European common currency (Euro) has puzzled students of the European Union for some time. As recent referenda demonstrate, Britons remain mysteriously cautious of monetary integration with mainland Europe. Though existing literature often attributes Britons' Euro-skepticism to nationalism or xenophobia, few have examined the role of economic concerns in determining British attitudes toward the Euro. Drawing on methodology developed by Perry and Robertson (2000), this study examines the role of capital markets in determining British attitudes toward the Euro. Specifically, using annual Euro-barometer and exchange rate data over the period 1979-1996, this study examines whether the Euro-Pound exchange rate plays a role in creating a pro- or anti-Euro political environment in Britain. Based on the assumption that, ceteris paribus, a pro-Euro political environment will likely result in pro-Euro policy, this study enables us to assess the effect of exchange rates on British policy toward the common currency. The study finds that, indeed, exchange rates do help shape the British political landscape - as the Euro flounders, British opinion toward the Euro sours; when the Euro outperforms the British Pound, Britons tend to acquiesce toward the notion of monetary integration.
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Includes bibliographical references (leaves 24-25).
Walker, Caton Montgomery (2001). The paradox of success: the roll of capital markets in determining British policy toward the European common currency, 1979-1996. Texas A&M University. Available electronically from