Specialization in Europe and asymmetric shocks: Potential risks of EMU
AbstractOne of the most obvious consequences of a monetary union is that monetary policy is lost as an instrument of national macroeconomic policy. The loss of the exchange rate as a national policy instrument has important implications for macroeconomic stability in the presence of asymmetric shocks, unexpected shocks that do not affect every nation in an equal way. The empirical literature on Optimum Currency Areas has concluded that the probability of asymmetric shocks to occur at a national level has tended to diminish in the Economic and Monetary Union (EMU) as a result of the intensification of the integration process during the most recent years. Therefore, since Economic Geography Theories predict an increasing specialisation of regions as a result of reallocation of industrial activity, the degree of asymmetry of industry-specific shocks will be specially relevant to determine if benefits overweight the costs associated to EMU. Previous studies, such as Bayoumi and Eichengreen (1995), Helg et al. (1995) or Ghosh and Wolf (1997), have examined to what extent sectoral asymmetric shocks have been relevant in the past using, mainly, static measures of asymmetries such as the correlation coefficients between series of sectoral shocks previously calculated from VAR or sVAR models (Blanchard and Quah, 1989; Blanchard and Katz, 1992). In this paper, we study the evolution of industry-specific asymmetries in Europe from a dynamic point of view (applying the methodology proposed by Boone, 1997) in order to obtain new evidence about the potential risks of EMU in the scenario proposed by Economic Geography Theories.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa98p86.
Date of creation: Aug 1998
Date of revision:
Contact details of provider:
Postal: Augasse 2-6, 1090 Vienna, Austria
Web page: http://www.ersa.org
Other versions of this item:
- Raul Ramos Lobo & Miguel Juan Clar Lopez & Jordi Surinach Caralt, 1999. "Spacialisation in Europe and asymmetric shocks: potential risks of EMU," Working Papers in Economics 50, Universitat de Barcelona. Espai de Recerca en Economia.
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F20 - International Economics - - International Factor Movements and International Business - - - General
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
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.:
- Stockman, Alan C., 1988.
"Sectoral and national aggregate disturbances to industrial output in seven European countries,"
Journal of Monetary Economics,
Elsevier, vol. 21(2-3), pages 387-409.
- Alan C. Stockman, 1989. "Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries," NBER Working Papers 2313, National Bureau of Economic Research, Inc.
- Eswar Prasad & Tamim Bayoumi, 1996.
"Currency Unions, Economic Fluctuations, and Adjustment - Some New Empirical Evidence,"
IMF Working Papers
96/81, International Monetary Fund.
- Tamim Bayoumi & Eswar Prasad, 1997. "Currency Unions, Economic Fluctuations, and Adjustment: Some New Empirical Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 36-58, March.
- Bayoumi, Tamim & Prasad, Eswar, 1995. "Currency Unions, Economic Fluctuations and Adjustment: Some Empirical Evidence," CEPR Discussion Papers 1172, C.E.P.R. Discussion Papers.
- Bayoumi, Tamim & Eichengreen, Barry, 1996. "Operationalizing the Theory of Optimum Currency Areas," CEPR Discussion Papers 1484, C.E.P.R. Discussion Papers.
- Mary Amiti, 1997.
"Specialisation Patterns in Europe,"
CEP Discussion Papers
dp0363, Centre for Economic Performance, LSE.
- Mary Amiti, 1999. "Specialization patterns in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(4), pages 573-593, December.
- Kenneth Button & Eric Pentecost, . "Regional Economic Convergence in Great Britain and Germany," Research Papers 94/5, CENTRE FOR RESEARCH IN EUROPEAN ECONOMICS AND FINANCE (CREEF).
- repec:imf:imfpdp:9607 is not listed on IDEAS
- Funke, Michael, 1997. "The Nature of Shocks in Europe and in Germany," Economica, London School of Economics and Political Science, vol. 64(255), pages 461-69, August.
- 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.
- 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.
- 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.
- Eichengreen, B., 1992. "Should the Maastricht Treaty be Saved?," Princeton Studies in International Economics 74, International Economics Section, Departement of Economics Princeton University,.
- Bayoumi, Tamim & Masson, Paul R., 1995.
"Fiscal flows in the United States and Canada: Lessons for monetary union in Europe,"
European Economic Review,
Elsevier, vol. 39(2), pages 253-274, February.
- Bayoumi, Tamim & Masson, Paul R, 1994. "Fiscal Flows in the United States and Canada: Lessons for Monetary Union in Europe," CEPR Discussion Papers 1057, C.E.P.R. Discussion Papers.
- André Sapir, 1996. "The effects of Europe's international market program on production and trade: a first assessment," ULB Institutional Repository 2013/8162, ULB -- Universite Libre de Bruxelles.
- Tamim Bayoumi and Barry Eichengreen., 1992.
"Shocking Aspects of European Monetary Unification,"
Economics Working Papers
92-187, University of California at Berkeley.
- Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
- Bayoumi, Tamim & Eichengreen, Barry, 1992. "Shocking Aspects of European Monetary Unification," CEPR Discussion Papers 643, C.E.P.R. Discussion Papers.
- Hall, S G & Robertson, D & Wickens, M R, 1992. "Measuring Convergence of the EC Economies," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(0), pages 99-111, Supplemen.
- Heylen F. & Van Poeck A. & Van Gompel J., 1993. "SESO PAPER: Real versus nominal convergence - national labour markets and the European integration process," Working Papers 1993285, University of Antwerp, Faculty of Applied Economics.
- Bayoumi, Tamim & Eichengreen, Barry, 1992. "Shocking Aspects of Monetary Unification," Department of Economics, Working Paper Series qt791143kp, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Costello, Donna M, 1993. "A Cross-Country, Cross-Industry Comparison of Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 207-22, April.
- Andrew C. Harvey, 1990. "The Econometric Analysis of Time Series, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026208189x, June.
- Esteban Sanroma Melendez & Raul Ramos Lobo, 1999. "El mercado de trabajo espanol en la union monetaria. Flexibilidad de salarios y politica laboral," Working Papers in Economics 45, Universitat de Barcelona. Espai de Recerca en Economia.
- Masson, Paul R, 1996. "Fiscal Dimensions of EMU," Economic Journal, Royal Economic Society, vol. 106(437), pages 996-1004, July.
- George S. Tavlas, 2009. "Optimum-Currency-Area Paradoxes," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 536-551, 08.
- Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-33, November.
- Stock, James H & Watson, Mark W, 1996.
"Evidence on Structural Instability in Macroeconomic Time Series Relations,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 14(1), pages 11-30, January.
- James H. Stock & Mark W. Watson, 1994. "Evidence on Structural Instability in Macroeconomic Time Series Relations," NBER Technical Working Papers 0164, National Bureau of Economic Research, Inc.
- James H. Stock & Mark W. Watson, 1994. "Evidence on structural instability in macroeconomic times series relations," Working Paper Series, Macroeconomic Issues 94-13, Federal Reserve Bank of Chicago.
- Begg, Iain, 1995. "Factor Mobility and Regional Disparities in the European Union," Oxford Review of Economic Policy, Oxford University Press, vol. 11(2), pages 96-112, Summer.
- Krugman, Paul & Venables, Anthony J., 1990. "Integration and the Competitiveness of Peripheral Industry," CEPR Discussion Papers 363, C.E.P.R. Discussion Papers.
- Helg, Rodolfo & Manasse, Paolo & Monacelli, Tommaso & Rovelli, Riccardo, 1995. "How much (a)symmetry in Europe? Evidence from industrial sectors," European Economic Review, Elsevier, vol. 39(5), pages 1017-1041, May.
- Cohen, Daniel & Wyplosz, Charles, 1989. "The European Monetary Union: An Agnostic Evaluation," CEPR Discussion Papers 306, C.E.P.R. Discussion Papers.
- Ramos, Raul & Clar, Miquel & Surinach, Jordi, 1999. "EMU: some unanswered questions," ERSA conference papers ersa99pa220, European Regional Science Association.
- Carlos Rodriguez-Fuentes & Sheila Dow, 2003. "EMU and the Regional Impact of Monetary Policy," Regional Studies, Taylor and Francis Journals, vol. 37(9), pages 969-980.
- Juan Luís Ollero & Raul Ramos & Jordi Suriñach-Caralt, 2001. "Macroeconomic implications of EMU at the regional level," ERSA conference papers ersa01p146, European Regional Science Association.
- Raul Ramos & Miquel Clar & Jordi Surinach, 2003. "A dynamic analysis of asymmetric shocks in EU manufacturing," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 881-892.
- Joan Costa-i-Font & Ramon Tremosa-i-Balcells, . "Spanish Regions and the Macroeconomic Benefits of European Monetary Union (EMU)," Studies on the Spanish Economy 89, FEDEA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).
If references are entirely missing, you can add them using this form.