This volume contains state of the art research which highlights fundamental conceptual, empirical and policy issues underlying a broad range of current European economic concerns, while also underscoring their wider significance. Major topics include the potential consequences of European Monetary Union for macroeconomic performance and the design of optimal policies, as well as the assessment of the degree of financial and real convergence in Europe. Other papers focus on the interrelation between the flexibility of labour markets and monetary unification, the international coordination of taxes on pollution, as well as the impact of European economic integration on the rest of the world. Taken together, the economic analysis offered here, by a distinguished group of both theoretical and applied international economists, delineates the state of current research on a wide spectrum of critical issues related to European economic integration.