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European economic integration and (A)symmetry of macroeconomic fluctuations

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  • C.J.M. Kool
  • C. Economidou

Abstract

This paper empirically investigates output and consumption asymmetries in the Eurozone and enlarged EU over the period 1992-2007, and their consequences for monetary policy. Our results reveal that the introduction of the euro has little impact on output asymmetry so far; however, it has led to somewhat greater consumption smoothing. The UK, Denmark and Sweden are no less asymmetric than the average Eurozone member state and could probably enter the EMU without significant macroeconomic costs. New EU member states are diverse but display higher output and, in particular, consumption asymmetries. This warrants caution against too quick expansion of the EMU.

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File URL: http://dspace.library.uu.nl/bitstream/handle/1874/31468/07-24.pdf
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Bibliographic Info

Paper provided by Utrecht School of Economics in its series Working Papers with number 07-24.

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Length: 35 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:use:tkiwps:0724

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Keywords: Integration; Macroeconomic Asymmetries; Welfare Gains; Risk Sharing; Euro;

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Cited by:
  1. Herbert S. Buscher & Hubert Gabrisch, 2011. "What Might Central Banks Lose or Gain in Case of Euro Adoption – A GARCH-Analysis of Money Market Rates for Sweden, Denmark and the UK," IWH Discussion Papers 9, Halle Institute for Economic Research.
  2. Jean-Sébastien Pentecôte & Maryline Huchet-Bourdon, 2009. "Shock asymmetries and distance to the Euro Area," Post-Print hal-00730072, HAL.

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