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The effects of US economic and financial crises on euro area convergence

Author

Listed:
  • Fabio C. Bagliano

    (Department of Economics and Public Finance "G. Prato", University of Torino)

  • Claudio Morana

    (Department of Economics and Quantitative Methods, University of Eastern Piedmont)

Abstract

As economic and financial integration between the US and the euro area is strong, assessing whether the recent US crisis may affect the process of real and nominal convergence within the euro area is important. The paper addresses this issue in the framework of a large-scale open economy macroeconometric model, featuring 14 euro area member countries, the USA, and 35 advanced and emerging economies. The results point to a likely contribution of US economic and financial crises to real divergence in the euro area, potentially affecting first, second and third moments of the output growth distribution; on the other hand, implications for nominal convergence are less clearcut.

Suggested Citation

  • Fabio C. Bagliano & Claudio Morana, 2010. "The effects of US economic and financial crises on euro area convergence," Working papers 15, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    • Handle: RePEc:tur:wpaper:15
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    References listed on IDEAS

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    Cited by:

    1. TRIANDAFIL, Cristina Maria, 2013. "Sustainability of convergence in the context of macro-prudential policies in the European Union," Working Papers of National Institute for Economic Research 130618, Institutul National de Cercetari Economice (INCE).
    2. Giulia Rivolta, 2018. "Potential ECB reaction functions with time-varying parameters: an assessment," Empirical Economics, Springer, vol. 55(4), pages 1425-1473, December.

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    More about this item

    Keywords

    Euro area convergence; Great Recession; financial crisis; economic crisis; factor vector autoregressive models;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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