This paper analyses the synchronization of business cycles between new and old EU members using various measures. The main findings are that Hungary, Poland and Slovenia have achieved a high degree of synchronization for GDP, industry and exports, but not for consumption and services. The other...

We propose a comprehensive methodology to characterize the business cycle comovements across European economies and some industrialized countries, always trying to ‘let the data speak’. Out of this framework, we propose a novel method to show that there is no ‘Euro economy’ that acts as...

Recent research demonstrates that imperfect information about returns to education distorts schooling investments. Questions remain about what information is missing in different settings and for whom such information is most critical. We conducted a field experiment to investigate whether Grade...

Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas non--exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two--factor framework where firms differ...

A monetary union is modelled as a technology that makes surprise devaluations impossible but requires voluntarily participating countries to follow the same monetary policy. It is shown that for low discount factors and sufficiently correlated shocks welfare in the union is higher than that...

If discretionary monetary policy implies an inflation bias, monetary unification boosts the accumulation of public debt. The additional debt accumulation is welfare reducing only if governments are sufficiently myopic. In the presence of myopic governments, debt ceilings play a useful role in...

We examine macroeconomic stability and the properties of the international transmission of business cycles under three exchange rate systems: a flexible, a unilateral peg and a single currency. The subjects of study are Germany and France. EMU increases output and decreases inflation variability...

Economic and monetary reunification in Germany has proved to be more expensive than previously thought - and not just for the Germans. If a `Mezzogiorno' problem of continuing fiscal transfers to the East and possible migration flows westwards are to be avoided, there must be convergence in...

This paper reviews the history, economic rationale and main components of the project of establishing a monetary union in Europe by 1999. The adoption of a single currency is shown to be the best available option following the liberalization of capital movements. Much of the institutional design...