The Nature of Shocks in Europe and in Germany.
The plan for European Monetary Union (EMU) hangs in part on the incidence of aggregate demand and supply shocks in the participating countries. This paper addresses that question empirically using a bivariate VAR. Identification of the underlying orthogonal demand and supply shocks is achieved using only long-run restrictions. Data for sixteen European countries and eleven West German states (Lander) show that the correlation of shocks among the EU countries is much lower than within Germany. This implies that there remain questions about the advisability of EMU. Copyright 1997 by The London School of Economics and Political Science
Year of publication: |
1997
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Authors: | Funke, Michael |
Published in: |
Economica. - London School of Economics (LSE). - Vol. 64.1997, 255, p. 461-69
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Publisher: |
London School of Economics (LSE) |
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