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While economic theory highlights the usefulness of flexible exchange rates in promoting adjustment in international relative prices, flexible exchange rates also can be a source of destabilizing shocks. We find that when countries joining the euro currency union abandoned their national exchange...
Persistent link: https://www.econbiz.de/10012998959
At a time of historic challenges to the viability of the Eurozone, we assess the contribution of the EU and the Euro to … segmentation is significantly lower for EU versus non- EU members. Bilateral valuation differentials remain lower for EU members …, financial regulation, and interest rate differences. Importantly, we find that EU membership reduces equity market segmentation …
Persistent link: https://www.econbiz.de/10013135396
The creation of the euro should now be recognized as an experiment that has led to the sovereign debt crisis in several countries, the fragile condition of major European banks, the high levels of unemployment, and the large trade deficits that now exist in most Eurozone countries. Although the...
Persistent link: https://www.econbiz.de/10013118129
Formation of the Euro area raises new questions about the coordination of monetary and fiscal policy. Using a New Neoclassical Synthesis (NNS) model, we show that a common monetary policy, responding to area-wide aggregates, has asymmetric effects on countries within the union, depending on...
Persistent link: https://www.econbiz.de/10013100660
In our European Economic Review (2002) paper, we used pre-1998 data on countries participating in and leaving currency unions to estimate the effect of currency unions on trade using (then-) conventional gravity models. In this paper, we use a variety of empirical gravity models to estimate the...
Persistent link: https://www.econbiz.de/10013015976
A common European bond would yield a common European Monetary Union risk free rate. We present tentative estimates of this common risk free for the European Monetary Union countries from 2004 to 2009 using variables motivated by a theoretical portfolio selection model. First, we analyze the...
Persistent link: https://www.econbiz.de/10013156250
This study grounds the establishment of EMU and the euro in the context of the history of international monetary cooperation and of monetary unions, above all in the U.S., Germany and Italy. The purpose of national monetary unions was to reduce transactions costs of multiple currencies and...
Persistent link: https://www.econbiz.de/10012772728
When countries of different sizes participate in a cooperative agreement, the potential gain from deviation determines the minimum power that each country requires in the common decision-making. lt;brgt;lt;bRgt;This paper studies the problem in the context of a monetary union - multiple...
Persistent link: https://www.econbiz.de/10012774523
We present historical examples of new forms of money that can be com- pared with the ECU. We first define the ECU in its official role before turning to developments in the private market for ECUs. We then examine historical antecedents of three attributes of ECUs: a unit of account; a basket of...
Persistent link: https://www.econbiz.de/10012777303
Data on output and prices for 11 EC member nations are analyzed to extract information on underlying aggregate supply and demand disturbances using a VAR decomposition. The coherence of the underlying shocks across countries and the speed of adjustment to these shocks are then compared to the...
Persistent link: https://www.econbiz.de/10012778838