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Similarity of Supply and Demand Shocks Between the New Member States and the Euro Zone. The Case of Romania

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Author Info

  • Dumitru, Ionut

    ()
    (1Academy of the Economic Studies Bucharest and Head of RESEARCH with Raiffeisen Bank Romania)

  • Dumitru, Ionela

    ()
    (Academy of the Economic Studies Bucharest)

Abstract

This paper assesses the correlation of supply and demand shocks between New Member States (NMS), including Romania, and the Eurozone. Using a structural VAR approach, we estimated the similarity between demand (both nominal and real) and supply shocks between NMS and the Eurozone, showing that the demand shocks are still negatively correlated with the Eurozone for some NMS, including Romania. Also, using a moving window, we estimated that the correlation of shocks increased over time, especially in the case of supply shocks. Even for some core members of the Eurozone, we find that the demand shocks seem to be idiosyncratic. The main conclusion of our paper is the fact that Romania, as well as some other NMS countries, still need time to become more synchronized and to avoid the occurrence of asymmetric shocks once they become members of the Eurozone.

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Bibliographic Info

Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

Volume (Year): (2011)
Issue (Month): 1 (March)
Pages: 5-19

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Handle: RePEc:rjr:romjef:v::y:2011:i:1:p:5-19

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Related research

Keywords: optimal currency area; supply and demand shocks; business cycle synchronization; euro adoption; convergence;

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Cited by:
  1. Zapodeanu Daniela, 2012. "Real And Nominal Convergence, The Syncronization Of Business Cycles Between The New Eurozone Members (Nem) Slovenia, Slovakia, Cyprus , Estonia And The Core Eurozone," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 629-634, December.

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