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Optimum filtering for optimum currency areas criteria

Author

Listed:
  • Itir Ozer

    () (Hacettepe University, Department of International Relations)

  • Ibrahim Ozkan

    () (Hacettepe University, Department of Economics)

Abstract

This study aims to analyze Turkey and the Economic and Monetary Union (EMU) countries in the light of criteria suggested by the optimum currency areas (OCA) theory and to compare the criteria obtained by an application of Hodrick-Prescott (H-P) and Baxter-King (B-K) filters. To this end, we follow a novel technique, fuzzy c-means (FCM) clustering with upper and lower levels of fuzziness. The results show that the application of the H-P filtering technique with appropriate smoothing parameter values produces sensible clusters.

Suggested Citation

  • Itir Ozer & Ibrahim Ozkan, 2007. "Optimum filtering for optimum currency areas criteria," Economics Bulletin, AccessEcon, vol. 6(44), pages 1-18.
  • Handle: RePEc:ebl:ecbull:eb-07f00058
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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume6/EB-07F00058A.pdf
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    References listed on IDEAS

    as
    1. Mongelli, Francesco Paolo, 2002. "├ČNew" Views on the Optimum Currency Area Theory: What is EMU Telling US?," Royal Economic Society Annual Conference 2002 140, Royal Economic Society.
    2. Kozluk, Tomasz, 2005. "CEEC Accession Countries and the EMU - An Assessment of Relative and Readiness for Euro-Area Membership," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 439-474.
    3. Schlicht, Ekkehart, 2004. "Estimating the Smoothing Parameter in the So-Called Hodrick-Prescott Filter," Discussion Papers in Economics 304, University of Munich, Department of Economics.
    4. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1.
    5. Christian J. Murray, 2003. "Cyclical Properties of Baxter-King Filtered Time Series," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 472-476, May.
    6. Artis, M.J. & Zhang, W., 2002. "Membership of EMU: A Fuzzy Clustering Analysis of Alternative Criteria," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 17, pages 54-79.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. DomeNico Raguseo & Jan Sebo, 2008. "Optimum Currency Areas theory and the Slovak suitability for the euro adoption," Economics Bulletin, AccessEcon, vol. 6(40), pages 1-14.
    2. Itir Ozer & Ibrahim Ozkan, 2008. "Practical Insights From Oca Variable Combinations," Economic Annals, Faculty of Economics, University of Belgrade, vol. 53(176), pages 38-60, January -.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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