The paper "The EU and Euro Impacts in Denmark" is a great example of a macro and microeconomics case study. The EU was established in 1957 and the part states primary focus was on building a typical market for exchange. However, as time passed it became clear that close monetary and economic cooperation was required in order to facilitate the growth of the internal market for the whole European economy, to make more employments, perform better, and for more noteworthy flourishing among the Europeans. In 1991 a treaty known as the Maastricht treaty on European Union was passed by the member states where it was decided that Europe would have tough and stable cash for the 21st century.
The Euro currency decided then and it still remains a single shared currency among the European Union member states (Mongelli, and Vega, 2006). The reason where the Euro was created was that dealing with a single currency creates numerous benefits over the past situation where each member state used a different currency. Furthermore, this helps to reduce fluctuation risk and exchange costs and strengthen the market.
It also results in increased closer cooperation between the member states for a currency that is stable and the economy to benefits all the parties. However, it is imperative to note that the Euro is not a currency for all EU member states. As a result, this paper seeks to analyze the economic, political, social, and cultural effects that the EU and euro have impacted on Denmark. The EU and euro on Denmark Economic The EU is based on the political and economic context and is aimed at promoting harmony among the European nations through the creation of a solitary market that facilitates free movement of people, goods, and services.
Denmark citizens have enjoyed an increased level of income for those years that the country has been a member of the EU. It is notable that in 2012 over 2 % of the citizens per capita income would have been lost if a single EU market was not available. Some of the economic effects that Denmark has enjoyed include the following; the presence and removal of non-tariff and availability of free trade have assisted in the reduction of prices and cost among consumers (Plü mper, and Troeger, 2006).
Through increased trade created by EU Denmark has experienced a rise in employment rates and increased income. EU has boosted the GDP of its member states and Denmark is one of them. The Euro is in the successive enlargement mode where members’ states are able to reap the benefits of a single market. The elimination of the exchange rate risks reduced transaction costs increased trade, competition as well as an enhanced financial integration. The objective of euro adoption also facilitates in sturdy incentives to follow necessary strategies in promoting nominal and actual convergence and counteraction of reform fatigue (Buiter, 2008). The financial crisis exposed Denmark to other vulnerabilities where the overoptimistic prospects about business benefits and family unit income controlled capital inflows and credit development that outperformed sound equilibrium levels.
As a result, unsustainability has been experienced and high current account deficits in banks. Credit growth, credits to households, and in specific contract advances have had the most element development and frequently prompted unsustainable land bubbles. Foreign-currency-denominated loans have markedly expanded markedly making households and corporations more vulnerable to currency depreciation.
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