1. Summing Up Paul De Grauwe

2.  We have discussed many issues  Let me organize the issues around the forthcoming referendum in Sweden  Suppose we were Swedes and we would vote in the referendum.  How would we vote given all we have learned here in sunny Crete?  Before doing this, let me first look at the macroeconomic performance of Sweden and the Eurozone

4.  The opponents to EMU in Sweden have an easy job today.  Being very sophisticated, we would look at other, more fundamental indicators, than the macroeconomic performance in 2003.  We get to the OCA-criteria (Mundell I)  Looking at the evidence (openness, asymmetric shocks, flexibility) we do not find that Sweden stands out as being very different from Finland, Austria, i.e. countries that are part of EMU

5.  But maybe these countries have not done their homework properly.  And there is still the possibility that some large shocks occur making the adjustment very difficult.  Austria and Finland may then regret it to have entered EMU

6.  All this is too pessimistic. There is Mundell II to cheer us up  Once in the union, Sweden will be spared the chronic speculative foreign exchange crises that it has experienced in the past and that have rocked the country  In addition, thanks to the endogeneity of the OCA-criteria the benefits of EMU will increase  In particular, thanks to the full integration of the Swedish capital market with the Eurozone, Swedish consumers will be able to smooth their consumption even after large shocks in output.

7.  The picture gets more positive.  There are more clouds, though.  Sweden will be subjected to the stability pact which is a set of rules constraining its independence.  There will be the European Commission telling the Swedes what they should do.  So, there is more to monetary union than monetary union

8.  EMU could become a Troian horse that will force political union onto the Swedes,  Will they not be ruled by faceless bureaucrats in Brussels?  Will the Swedes not loose their independence and their soul?  The picture gets even more confused.

9.  There is more to confuse us.  A Swedish yes vote may turn around public opinion in the UK and Denmark, and may facilitate the early entry of central Europe.  Will this not lead to a union that is just too big to manage?  The enlarged ECB will become even less transparent than it is today, leading to confusion in the financial markets  And giving the FT more reason to criticize the ECB

10.  But then again, this large union will stimulate trade and finance;  it will enhance mobility of capital and labour  and boost economic growth (making André and Marco happy).  solving our social security system including our pension systems.

11.  And when all this has happened, the euro may overtake the dollar as the world currency  allowing Eurozone governments to run large budget deficits without having to worry about excessive debts  because these deficits will be financed by eager Asian governments willing to buy large amounts of eurobonds (including the Italian benchmark bonds)  making it possible to burry the stability pact (making Jacques, Paul and Richard happy)

12.  The future looks bright  Will the Swedes lend their ears to this optimistic message?