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The Endogeneity of the Optimum Currency Area Criteria, Intraindustry Trade, and EMU Enlargement Author info | Abstract | Publisher info | Download info | Related research | Statistics Jarko Fidrmuc
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This paper tests the endogeneity hypothesis of OCA criteria (Frankel and Rose, 1998) in a cross-section of OECD countries between 1990 and 1999. It is shown that intraindustry trade actually causes the convergence of business cycles, while there is no direct relation between business cycles and bilateral trade intensity. As far as intraindustry trade is positively correlated with trade, the OCA endogeneity hypothesis is confirmed, although the argumentation follows Krugman (1993). Finally, the endogeneity of OCA criteria implies a comparable degree of business cycle harmonization of CEECs with EU countries as for the current members for the medium term.
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Paper provided by LICOS - Centre for Institutions and Economic Performance, K.U.Leuven in its series LICOS Discussion Papers with number
10601.
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Length: 22 pages
Date of creation: 2001Date of revision:
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Keywords: Optimum currency area ; EMU ; trade ; business cycle ; CEECs ; Other versions of this item:
Find related papers by JEL classification: F15 - International Economics - - Trade - - - Economic Integration F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports :
References listed on IDEAS 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.: Fidrmuc, Jan & Fidrmuc, Jarko, 2000.
"Disintegration and Trade ,"
CEPR Discussion Papers
2641, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Jarko Fidrmuc & Jan Fidrmuc, 2001.
"Disintegration and Trade ,"
LICOS Discussion Papers
9901, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven.
[Downloadable!] Jarko Fidrmuc & Jan Fidrmuc, 2000.
"Disintegration and Trade ,"
William Davidson Institute Working Papers Series
353, William Davidson Institute at the University of Michigan Stephen M. Ross Business School.
[Downloadable!] Jan Fidrmuc & Jarko Fidrmuc, 2003.
"Disintegration and Trade ,"
Review of International Economics ,
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NBER Working Papers
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Review of World Economics (Weltwirtschaftliches Archiv) ,
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Dixit, Avinash, 2000.
"A Repeated Game Model of Monetary Union ,"
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Portes, Richard, 2001.
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2955, C.E.P.R. Discussion Papers.
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Tamim Bayoumi & Barry Eichengreen, 1992.
"Shocking Aspects of European Monetary Unification ,"
NBER Working Papers
3949, National Bureau of Economic Research, Inc.
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Other versions: Fidrmuc, Jan & Horvath, Julius & Fidrmuc, Jarko, 1999.
"Stability of Monetary Unions: Lessons from the Break-up of Czechoslovakia ,"
Transition Economics Series
10, Institute for Advanced Studies.
[Downloadable!]
Other versions: Boone, Laurence & Maurel, Mathilde, 1998.
"Economic Convergence of the CEECs with the EU ,"
CEPR Discussion Papers
2018, C.E.P.R. Discussion Papers.
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Frankel, Jeffrey A. & Rose, Andrew K., 1997.
"Is EMU more justifiable ex post than ex ante? ,"
European Economic Review ,
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Artis, Michael J & Zhang, Wenda, 1995.
"International Business Cycles and the ERM: Is there a European Business Cycle? ,"
CEPR Discussion Papers
1191, C.E.P.R. Discussion Papers.
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Other versions: Michael Artis, 2003.
"Is there a European Business Cycle? ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
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Fidrmuc, Jarko, 1999.
"Verification of the New Trade Theory in EU's Trade with CEECs ,"
Economics Series
72, Institute for Advanced Studies.
[Downloadable!]
George Kopits, 1999.
"Implications of EMU for Exchange Rate Policy in Central and Eastern Europe ,"
IMF Working Papers
99/9, International Monetary Fund.
Rose, Andrew K, 1999.
"One Money, One Market: Estimating the Effect of Common Currencies on Trade ,"
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2329, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Rose, Andrew, 1999.
"One Money, One Market: Estimating the Effect of Common Currencies on Trade ,"
Seminar Papers
678, Stockholm University, Institute for International Economic Studies.
[Downloadable!] Andrew K. Rose, 1999.
"One Money, One Market: Estimating the Effect of Common Currencies on Trade ,"
NBER Working Papers
7432, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) 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.
[Downloadable!] (restricted)
Cincibuch, Martin & Vávra, David, 2000.
"Towards the EMU: A Need For Exchange Rate Flexibility? ,"
Transition Economics Series
17, Institute for Advanced Studies.
[Downloadable!]
Jeffrey A. Frankel & Andrew K. Rose, 1996.
"The Endogeneity of the Optimum Currency Area Criteria ,"
NBER Working Papers
5700, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Frankel, Jeffrey A & Rose, Andrew K, 1996.
"The Endogeneity of the Optimum Currency Area Criteria ,"
CEPR Discussion Papers
1473, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Frankel, Jeffrey A & Rose, Andrew K, 1998.
"The Endogeneity of the Optimum Currency Area Criteria ,"
Economic Journal ,
Royal Economic Society, vol. 108(449), pages 1009-25, July.
[Downloadable!] (restricted) Barry Eichengreen & Tamim Bayoumi, 1996.
"Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries ,"
Center for International and Development Economics Research, Working Paper Series
1036, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
[Downloadable!]
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