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Similarity of Supply and Demand Shocks Between the Euro Area and the CEECs

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  • Fidrmuc, Jarko

    (Osterreichische Nationalbank)

  • Iikka Korhonen

Abstract

We assess the correlation of supply and demand shocks between the countries of the euro area and the accession countries in the 1990s. Shocks are recovered from estimated structural VAR models of output growth and inflation. We find that some accession countries have a quite high correlation of the underlying shocks with the euro area. However, even for many advanced accession countries, the shocks remain significantly more idiosyncratic. Continuing integration within the EU is likely to align the business cycles of these countries similarly to the sync

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 77.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:77

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Keywords: optimum currency area; EU enlargement; structural VAR;

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  1. Boone, Laurence & Maurel, Mathilde, 1999. "An Optimal Currency Area Perspective of the EU Enlargement to the CEECs," CEPR Discussion Papers 2119, C.E.P.R. Discussion Papers.
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  7. Fidrmuc, Jarko & Korhonen, Iikka, 2003. "Similarity of supply and demand shocks between the euro area and the CEECs," Economic Systems, Elsevier, vol. 27(3), pages 313-334, September.
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  13. Iikka Korhonen, 2002. "Some empirical tests on the integration of economic activity between the euro area and the accession countries," Macroeconomics 0209006, EconWPA.
  14. Ronald McKinnon, 2002. "Optimum currency areas and the European experience," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(2), pages 343-364, July.
  15. Fidrmuc, Jan & Horvath, Julius & Fidrmuc, Jarko, 1999. "The Stability of Monetary Unions: Lessons from the Breakup of Czechoslovakia," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 753-781, December.
  16. Jarko Fidrmuc & Daniela Grozea-Helmenstein & Andreas Wörgötter, 1999. "East-west intra-industry trade dynamics," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(2), pages 332-346, June.
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  18. Frenkel, Michael & Nickel, Christiane & Schmidt, Günter, 1999. "Some shocking aspects of EMU enlargement," Research Notes 99-4, Deutsche Bank Research.
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