Membership of EMU : a fuzzy clustering analysis of alternative criteria

Abstract

This paper examines the readiness for EMU of the EU countries, using techniques of "fuzzy clustering" to ascertain the "degree of belongingness" of each country, either to a core group of EMU-ready countries or to some other grouping. Several studies of the "core" and "periphery" of EMU already exist in the literature: the classic example is perhaps Bayoumi and Eichengreen (1993), but reference may also be made to Canzoneri et al. (1996), Bayoumi and Eichengreen ( 1997a and 1997b ), Taylor ( 1995) and an earlier study by the present authors (Artis and Zhang 1998), among others. In this light and, more especially, given the fact that the initial membership of EMU has already been determined by the decision taken in May 1998 to proceed with EMU on a broad (EU-11) basis from 1st January 1999, the value of a further investigation of this type might seem to need particular justification.