The introduction of the euro raised two questions: what was the appropriate exchange rate of the European currencies for entry in the EMU? What were the main determinants of the external value of the euro? To bring some insight in the matter, the concept of equilibrium exchange rates was used,...

Since the euro was launched, divergences in European economies'evolutions have been more significant than generally expected. The article, based on a multinational macroeconomic model describing the interdependence between 14 European countries, examines the role played by relative-price...