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EMU enlargement, stabilization costs and insurance mechanisms

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  • Afonso, António
  • Furceri, Davide

Abstract

This paper considers the determinants of the macroeconomic costs of joining EMU for the new EU Member Sates, and compares them with those of the EMU members. Specifically, we investigate the business cycle correlation between the candidate's economy and that of the euro area as a whole, and the ability of insurance mechanisms and fiscal policies to smooth income fluctuations. The results suggest that EMU membership would not be costly for some countries (Cyprus, Hungary and Malta) but for other countries it could have relevant costs, at least in the short-run. For some of these countries, business cycles are not yet well synchronized with the euro area's business cycle, and risk-sharing mechanisms do not provide enough insurance against shocks.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 27 (2008)
Issue (Month): 2 (March)
Pages: 169-187

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Handle: RePEc:eee:jimfin:v:27:y:2008:i:2:p:169-187

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Web page: http://www.elsevier.com/locate/inca/30443

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References

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Citations

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Cited by:
  1. Jesús Crespo-Cuaresma & Octavio Fernández-Amador, 2010. "Business cycle convergence in EMU: A second look at the second moment," FIW Working Paper series 056, FIW.
  2. Masayoshi Hayashi, 2013. "On the Decomposition of Regional Stabilization and Redistribution," CIRJE F-Series CIRJE-F-910, CIRJE, Faculty of Economics, University of Tokyo.
  3. Kosei Fukuda, 2010. "Three new empirical perspectives on the Hodrick–Prescott parameter," Empirical Economics, Springer, vol. 39(3), pages 713-731, December.
  4. António Afonso & João Tovar Jalles, 2013. "Fiscal Composition and Long-term Growth," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  5. Davide Furceri & Annabelle Mourougane, 2009. "Financial Crises: Past Lessons and Policy Implications," OECD Economics Department Working Papers 668, OECD Publishing.
  6. Sybille Lehwald, 2012. "Has the Euro Changed Business Cycle Synchronization?Evidence from the Core and the Periphery," Ifo Working Paper Series Ifo Working Paper No. 122, Ifo Institute for Economic Research at the University of Munich.
  7. Lukas Vogel & Werner Roeger & Bernhard Herz, 2012. "The performance of simple fiscal policy rules in monetary union," European Economy - Economic Papers 470, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  8. António Afonso & Davide Furceri, 2009. "Sectoral Business Cycle Synchronization in the European Union," Economics Bulletin, AccessEcon, vol. 29(4), pages 2996-3014.
  9. Annabelle Mourougane & Davide Furceri, 2010. "Une lecture de la crise à la lumière des crises passées," Économie et Statistique, Programme National Persée, vol. 438(1), pages 19-42.
  10. Triandafil, Cristina Maria, 2011. "The Analysis Of The Convergence Criteria. Empirical Perspective In The Context Of The Sustainable Character Highlight," Working Papers of National Institute of Economic Research 111205, National Institute of Economic Research.
  11. Furceri, Davide, 2010. "Stabilization effects of social spending: Empirical evidence from a panel of OECD countries," The North American Journal of Economics and Finance, Elsevier, vol. 21(1), pages 34-48, March.
  12. TRIANDAFIL, Cristina Maria, 2013. "Sustainability of convergence in the context of macro-prudential policies in the European Union," Working Papers of National Institute of Economic Research 130618, National Institute of Economic Research.
  13. Sampawende Jules Tapsoba, 2011. "Union Monétaire en Afrique de l'Ouest: Quelles Réponses à l'Hétérogénéité des Chocs ?," Working Papers halshs-00554309, HAL.
  14. Afonso, António & Jalles, João Tovar, 2013. "Growth and productivity: The role of government debt," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 384-407.
  15. Davide Furceri & Aleksandra Zdzienicka, 2013. "The Euro Area Crisis," IMF Working Papers 13/198, International Monetary Fund.

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