EMU: OECD RECOMMENDS DANISH ENTRY INTO THE EURO ZONE.

Denmark, along with the United Kingdom, negotiated an opt-out permitting it to decline participation in the single currency even if it met all of the convergence criteria. The OECD notes that inflation continued to increase over 1999, exceeding 3%. At the beginning of the year, Denmark even fell out of line with the EMU inflation criterion (inflation in the candidate country must not exceed the average for the three countries with the lowest rates by more than 1.5%). This slippage is nevertheless considered to be only temporary.The report recalls that monetary conditions play a major role in determining Denmark's short-term outlook, and that they are effectively determined by the economic situation in Europe as a whole. The economy was out of step with the rest of Europe during the nineties producing sometimes inappropriate monetary conditions. However, the "soft landing" achieved in 1999 may help to align the Danish business cycle with that of the Euro zone in the future. This development may reduce the risk of untimely monetary impulses. The survey recalls that Denmark has a long-standing and highly-credible policy of maintaining a fixed exchange rate.Sustained growth.After a period of strong, sustained growth, the "soft landing" in 1999 should yield real...