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Changes in behaviour under EMU

  • Mayes, David
  • Virén, Matti

Using a simple model of the euro area economy, we explore whether EMU has been associated with changes in behaviour both in the run up to Stage 3 and since it started operating. We find that some behaviour has indeed changed; expectations formation, inflation, country dispersion of behaviour, fiscal policy (although the run up to Stage 3 shows a greater change than within it) and monetary policy (with several caveats). However, EMU does not appear to be associated with changes in the labour markets; employment, output growth and productivity. Substantial caution is needed in attributing these changes to EMU as much of the rest of OECD enjoyed similar changes over the same period.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 26 (2009)
Issue (Month): 4 (July)
Pages: 751-759

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Handle: RePEc:eee:ecmode:v:26:y:2009:i:4:p:751-759
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