Shock asymmetries and distance to the Euro Area
AbstractSince January 2008, the Euro Area has enlarged for the third time to Cyprus and Malta. As Slovakia is now planned to join in 2009, these waves of new entries revive the debate around greater asymmetries which may threaten the stability of the whole monetary union. This paper extends Bayoumi and Eichengreen's (1992) centre-periphery approach. We show how a suitable decomposition of the correlations between supply and demand disturbances enables to get two new indices to give a more intuitive assessment of the distance to the Euro area and the origin of shock asymmetries. Using monthly data over 1995-2008 on 21 countries, asymmetries are measured by correlations among the structural shocks from a VAR process. We then translate these correlations estimates into two synthetic indices. One can be interpreted as the relative distance of the candidate country to a fully symmetric currency area. The other reveals the relative magnitude of shock asymmetries. Our very first results show that most of the countries under study are closer to the seminal Euro area rather than to Germany. New comers remain at the periphery of the Euro area with pronounced shock asymmetries than either the founder members or the three Opt-Outs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Post-Print with number hal-00730072.
Date of creation: 28 May 2009
Date of revision:
Publication status: Published - Presented, 13th International Conference on Macroeconomic Analysis and International Finance, 2009, Gallos (CR), Greece
Note: View the original document on HAL open archive server: http://hal-agrocampus-ouest.archives-ouvertes.fr/hal-00730072
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giovanni Di Bartolomeo & Jacob Engwerda & Joseph Plasmans & Bas van Aarle & Tomasz Michalak, 2005.
"Macroeconomic Stabilization Policies in the EMU: Spillovers, Asymmetries, and Institutions,"
CESifo Working Paper Series
1376, CESifo Group Munich.
- Joseph Plasmans & Jacob Engwerda & Bas van Aarle & Tomasz Michalak & Giovanni Di Bartolomeo, 2006. "Macroeconomic Stabilization Policies In The Emu: Spillovers, Asymmetries And Institutions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 461-484, 09.
- DI BARTOLOMEO, Giovanni & ENGWERDA, Jacob & PLASMANS, Joseph & VAN AARLE, Bas, 2003. "Macroeconomic stabilisation policies in the EMU: Spillovers, asymmetries and institutions," Working Papers 2003019, University of Antwerp, Faculty of Applied Economics.
- M.J. Artis, 2002.
"Reflections on the Optimal Currency Area (oca) Criteria in the Light of EMU,"
Working Papers Central Bank of Chile
193, Central Bank of Chile.
- M.J. Artis, 2003. "Reflections on the optimal currency area (OCA) criteria in the light of EMU," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(4), pages 297-307.
- Michael J. Artis, 2002. "Reflections on the Optimal Currency Area (OCA) criteria in the light of EMU," Working Papers 69, Oesterreichische Nationalbank (Austrian Central Bank).
- Olivier Jean Blanchard & Danny Quah, 1988.
"The Dynamic Effects of Aggregate Demand and Supply Disturbance,"
497, Massachusetts Institute of Technology (MIT), Department of Economics.
- Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September.
- Olivier Jean Blanchard & Danny Quah, 1988. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," NBER Working Papers 2737, National Bureau of Economic Research, Inc.
- Marilyne Huchet-Bourdon & Jean-Sébastien Pentecôte, 2008. "Élargissement de la zone euro et mesure des asymétries. Un bilan empirique," Revue économique, Presses de Sciences-Po, vol. 59(2), pages 341-358.
- Heather Anderson & Mardi Dungey & Denise R. Osborn & Farshid Vahid, 2007.
"Constructing Historical Euro Area Data,"
CAMA Working Papers
2007-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Heather Anderson & Mardi Dungey & Denise Osborn & Farshid Vahid, 2007. "Constructing Historical Euro Area Data," Money Macro and Finance (MMF) Research Group Conference 2006 99, Money Macro and Finance Research Group.
- Jarko Fidrmuc & Iikka Korhonen, 2006.
"Meta-Analysis of the Business Cycle Correlation between the Euro Area and the CEECs,"
CESifo Working Paper Series
1693, CESifo Group Munich.
- Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
- Hill, Robert J., 2003.
"Constructing price indexes across space and time: the case of the European Union,"
GGDC Research Memorandum
200362, Groningen Growth and Development Centre, University of Groningen.
- Robert J. Hill, 2004. "Constructing Price Indexes across Space and Time: The Case of the European Union," American Economic Review, American Economic Association, vol. 94(5), pages 1379-1410, December.
- Hill, Robert J., 2003. "Constructing price indexes across space and time: the case of the European Union," Research Report 03C20, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Mark Mink & Jan P.A.M. Jacobs & Jakob de Haan, 2012.
"Measuring coherence of output gaps with an application to the euro area,"
Oxford Economic Papers,
Oxford University Press, vol. 64(2), pages 217-236, April.
- Jakob de Haan & Jan Jacobs & Mark Mink, 2007. "Measuring Synchronicity and Co-movement of Business Cycles with an Application to the Euro Area," CESifo Working Paper Series 2112, CESifo Group Munich.
- Mark Mink & Jan P.A.M. Jacobs & Jakob de Haan, 2007. "Measuring Synchronicity And Co-Movement Of Business Cycles With An Application To The Euro Area," CAMA Working Papers 2007-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Economidou, Claire & Kool, Clemens, 2009.
"European economic integration and (a)symmetry of macroeconomic fluctuations,"
Elsevier, vol. 26(4), pages 778-787, July.
- C.J.M. Kool & C. Economidou, 2007. "European economic integration and (A)symmetry of macroeconomic fluctuations," Working Papers 07-24, Utrecht School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.