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A Withdrawal from the Eurozone: Some Simulation Studies with the NiGEM Model

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  • Suni, Paavo

Abstract

A withdrawal of a member state from the EMU due to market pressure has been a rather popular topic in the public debate in recent years. However, the effects of a withdrawal have been analysed quantitatively surprisingly little. Discussions have been concentrated on the crisis countries, but as the Finnish economic difficulties have deepened also on Finland. In the report, the effects of the potential withdrawal of Greece, one of the weakest economies in the EMU, is studied first. In addition we try to sketch the economic effects of a withdrawal of the relatively more balanced Finland. The analysis is made using an international econometric model (NiGEM), where the global economy and the individual economies are described in a rather detailed way based on economic theory and past economic behaviour. Benefits and costs, measured with effects on the GDP, of a withdrawal are related in the short and particularly in the longer run to the ability of labour markets to achieve sustainable wage agreements and to the ability to keep the financial markets calm.

Suggested Citation

  • Suni, Paavo, 2014. "A Withdrawal from the Eurozone: Some Simulation Studies with the NiGEM Model," ETLA Reports 39, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:39
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    File URL: http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-39.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A withdrawal from the Eurozone: Some Simulation Studies
      by brianmlucey in Brian M. Lucey on 2015-06-28 00:19:52

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    Cited by:

    1. Cyrille Lenoël & Corrado Macchiarelli & Garry Young, 2022. "Greece 2010-18: What could we have done differently?," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 172, Hellenic Observatory, LSE.
    2. Cyrille Lenoël & Corrado Macchiarelli & Garry Young, 2023. "Greece 2010–18: What Could Have Been Done Differently?," Open Economies Review, Springer, vol. 34(2), pages 281-315, April.

    More about this item

    Keywords

    NiGEM; Simulation; EMU; Grexit; Fixit;
    All these keywords.

    JEL classification:

    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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