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Changes in behaviour under EMU

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  • Mayes, David
  • Virén, Matti

Abstract

Using a simple model of the euro area economy, we explore whether EMU has been associated with changes in behaviour both in the run up to Stage 3 and since it started operating. We find that some behaviour has indeed changed; expectations formation, inflation, country dispersion of behaviour, fiscal policy (although the run up to Stage 3 shows a greater change than within it) and monetary policy (with several caveats). However, EMU does not appear to be associated with changes in the labour markets; employment, output growth and productivity. Substantial caution is needed in attributing these changes to EMU as much of the rest of OECD enjoyed similar changes over the same period.

Suggested Citation

  • Mayes, David & Virén, Matti, 2009. "Changes in behaviour under EMU," Economic Modelling, Elsevier, vol. 26(4), pages 751-759, July.
    • Handle: RePEc:eee:ecmode:v:26:y:2009:i:4:p:751-759
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    2. Mutascu, Mihai & Sokic, Alexandre, 2021. "Okun's law in the US: New insights in time and frequency," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 207-222.
    3. Crespo-Cuaresma, Jesús & Fernández-Amador, Octavio, 2013. "Business cycle convergence in EMU: A second look at the second moment," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 239-259.
    4. Durech, Richard & Minea, Alexandru & Mustea, Lavinia & Slusna, Lubica, 2014. "Regional evidence on Okun's Law in Czech Republic and Slovakia," Economic Modelling, Elsevier, vol. 42(C), pages 57-65.

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