This work presents five structural co-integrating VAR models used to describe the economies of France, Germany, Italy, the Netherlands and Spain in the years 1983-1998 and to analyse their economic policies. Shortrun dynamics move around the long-run structure, represented by money, goods and capital market equilibrium conditions. The fitting of the reference theoretical model to the data is not imposed a priori but empirically tested. Long- and short-run properties of models highlight deep heterogeneities in the economic structures and in the monetary policy transmission mechanism among the countries. Germany plays a dominant role in the European economy and, together with the Netherlands, seems to have formed an economic area where the money, goods and capital markets are integrated. France is linked to this area, while Italy turns out to be less integrated. Finally, Spain seems to be completely disjoined.
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Paper provided by Sapienza University of Rome, Department of Public Economics in its series Working Papers with number
73.
Find related papers by JEL classification: E00 - Macroeconomics and Monetary Economics - - General - - - General C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
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