IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v27y2004i3p301-358.html

Britain and EMU: Assessing the Costs in Macroeconomic Variability

Author

Listed:
  • Patrick Minford
  • David Meenagh
  • Bruce Webb

Abstract

Stochastic simulations are used on the Liverpool Model of the UK to assess the effect of UK euro entry on macroeconomic stability. Instability increases substantially, particularly for inflation and real interest rates. A key factor is the extent of the euro's instability against the dollar; by adopting a regional currency the UK imports this source of shocks, as well as losing its control of interest rates. The results are not highly sensitive to changes in assumptions about the degree of labour market flexibility, the use of fiscal policy, and increased convergence of monetary transmission.

Suggested Citation

  • Patrick Minford & David Meenagh & Bruce Webb, 2004. "Britain and EMU: Assessing the Costs in Macroeconomic Variability," The World Economy, Wiley Blackwell, vol. 27(3), pages 301-358, March.
    • Handle: RePEc:bla:worlde:v:27:y:2004:i:3:p:301-358
    DOI: 10.1111/j.1467-9701.2004.00602.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9701.2004.00602.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9701.2004.00602.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Andrews, M J & Minford, A P L & Riley, J, 1996. "On Comparing Macroeconomic Models Using Forecast Encompassing Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 279-305, May.
    2. Brunner, Karl & Meltzer, Allan H., 1976. "The Phillips curve," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 1-18, January.
    3. Ray Barrell & Karen Dury, 2000. "Choosing the Regime: Macroeconomic Effects of UK Entry into EMU," Journal of Common Market Studies, Wiley Blackwell, vol. 38(4), pages 625-644, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vo Le & Patrick Minford, 2006. "Joining the European Monetary Union—Comparing First and Second Generation Open Economy Models," Open Economies Review, Springer, vol. 17(3), pages 281-296, July.
    2. Stefano d'Addona & Ilaria Musumeci, 2013. "The British opt-out from the European Monetary Union: empirical evidence from monetary policy rules," Applied Financial Economics, Taylor & Francis Journals, vol. 23(23), pages 1783-1795, December.
    3. Sandeep Mazumder & Ryan Pahl, 2013. "What if the UK had Joined the Euro in 1999?," Open Economies Review, Springer, vol. 24(3), pages 447-470, July.
    4. Patrick Minford & Konstantinos Theodoridis & David Meenagh, 2009. "Testing a Model of the UK by the Method of Indirect Inference," Open Economies Review, Springer, vol. 20(2), pages 265-291, April.
    5. Chris Mulhearn & Howard R. Vane, 2005. "The UK and the Euro: Debating the British Decision," The World Economy, Wiley Blackwell, vol. 28(2), pages 243-258, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meenagh, David & Minford, Patrick & Nowell, Eric & Sofat, Prakriti & Srinivasan, Naveen, 2009. "Can the facts of UK inflation persistence be explained by nominal rigidity?," Economic Modelling, Elsevier, vol. 26(5), pages 978-992, September.
    2. David Meenagh & Patrick Minford & Eric Nowell & Prakriti Sofat & Naveen Srinivasan, 2007. "Are the facts of UK inflation persistence to be explained by nominal rigidity or changes in monetary regime?," WEF Working Papers 0028, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    3. Matthews, Kent & Meenagh, David & Minford, Patrick & Webb, Bruce, 2006. "Monetary regimes: is there a trade-off between consumption and employment variability?," Cardiff Economics Working Papers E2006/12, Cardiff University, Cardiff Business School, Economics Section.
    4. Hendry, David F. & Clements, Michael P., 2003. "Economic forecasting: some lessons from recent research," Economic Modelling, Elsevier, vol. 20(2), pages 301-329, March.
    5. J.P.G. Reijnders, 2007. "Impulse or propagation? How the tides turned in Business Cycle Theory," Working Papers 07-07, Utrecht School of Economics.
    6. Poterba, James M. & Summers, Lawrence H., 1983. "Dividend taxes, corporate investment, and `Q'," Journal of Public Economics, Elsevier, vol. 22(2), pages 135-167, November.
    7. Elvio Accinelli & Juan Gabriel Brida, 2007. "Modelos económicos con múltiples regímenes," Revista de Administración, Finanzas y Economía (Journal of Management, Finance and Economics), Tecnológico de Monterrey, Campus Ciudad de México, vol. 1(2), pages 96-115.
    8. Mulder, C.B., 1986. "Testing Korteweg's rational expectations model for a small open economy," Other publications TiSEM c52e6c80-834d-49c7-ae6a-b, Tilburg University, School of Economics and Management.
    9. Bentour, El Mostafa, 2013. "Oil Prices, Drought Periods and Growth Forecasts in Morocco," MPRA Paper 52892, University Library of Munich, Germany.
    10. Tryphon Kollintzas, 1986. "Tax Policy under Nongeometric Physical Depreciation," Public Finance Review, , vol. 14(3), pages 263-288, July.
    11. He, Yong, 2018. "Can the visible and invisible hands coexist in land pricing?," MPRA Paper 88770, University Library of Munich, Germany.
    12. Michael R. Darby, 1983. "International Transmission of Monetary and Fiscal Shocks under Pegged and Floating Exchange Rates: Simulation Experiments," NBER Chapters, in: The International Transmission of Inflation, pages 162-231, National Bureau of Economic Research, Inc.
    13. Lozej, Matija & Rannenberg, Ansgar, 2017. "The macroeconomic effects of the regulatory LTV and LTI ratios in the Central Bank of Ireland's DSGE model," Economic Letters 04/EL/17, Central Bank of Ireland.
    14. I. Bukina S. & P. Orekhovsky A. & И. Букина С. & П. Ореховский А., 2018. "Особенности российской модели экономического роста // Specific features of the Russian Economic Growth Model," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(6), pages 6-24.
    15. Bruno Frey, 2011. "Tullock challenges: happiness, revolutions, and democracy," Public Choice, Springer, vol. 148(3), pages 269-281, September.
    16. Jun, Bogang & Kim, Tai-Yoo, 2015. "A neo-Schumpeterian perspective on the analytical macroeconomic framework: The expanded reproduction system," Hohenheim Discussion Papers in Business, Economics and Social Sciences 11-2015, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    17. Juan Manuel Larrosa, 2016. "Agentes computacionales y análisis económico," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(34), pages 87-113, January-J.
    18. Cathy Yi-Hsuan Chen & Thomas C. Chiang, 2017. "Surprises, sentiments, and the expectations hypothesis of the term structure of interest rates," Review of Quantitative Finance and Accounting, Springer, vol. 49(1), pages 1-28, July.
    19. Peter J. Buckley & Jeremy Clegg & Nicolas Forsans & Kevin T. Reilly, 2010. "A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: The Canada-United States Relationship in the Context of Free Trade," Palgrave Macmillan Books, in: Foreign Direct Investment, China and the World Economy, chapter 17, pages 386-418, Palgrave Macmillan.
    20. repec:ipg:wpaper:2014-567 is not listed on IDEAS
    21. Malick Souare, 2003. "Macroeconomic Implications of Population Aging and Public Pensions," Social and Economic Dimensions of an Aging Population Research Papers 100, McMaster University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:27:y:2004:i:3:p:301-358. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.