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EU unification and linkages among the European currencies: new evidence from the EU and the EEA

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  • Stoupos, Nikolaos
  • Kiohos, Apostolos

Abstract

The global financial crisis of 2008 and the debt crisis of 2010 in the Eurozone create multiple anomalies in the international financial system. The current article examines if the Eurozone is able to expand further. Exchange rates constitute an important parameter in order to examine the EU integration. We used a combination of Error Correction Model with Exponential GARCH, ECM-EGARCH. The empirical evidence highly supports that, from a financial viewpoint, the UK should not join the euro. Switzerland shows historically an exchange rate independence from euro but there are recent indications which support the opposite direction. Additionally, the results suggest that Sweden should join the Eurozone as there is a strong historical linkage between the euro and the Swedish koruna. Finally, the devaluation of the euro against the dollar shows a greater impact, than the overvaluation against the dollar, on the Sterling pound, the Swiss franc and the Swedish koruna.

Suggested Citation

  • Stoupos, Nikolaos & Kiohos, Apostolos, 2017. "EU unification and linkages among the European currencies: new evidence from the EU and the EEA," Research in International Business and Finance, Elsevier, vol. 41(C), pages 28-36.
    • Handle: RePEc:eee:riibaf:v:41:y:2017:i:c:p:28-36
    DOI: 10.1016/j.ribaf.2017.04.015
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    Cited by:

    1. Gorman, Michael & Orlowski, Lucjan T. & Roessler, Matthew H., 2020. "Dynamic interactions between Central European currencies and the euro," Economic Systems, Elsevier, vol. 44(3).
    2. Kerry Liu, 2023. "America's decoupling from China: A perspective from stock markets," Economic Affairs, Wiley Blackwell, vol. 43(1), pages 32-52, February.
    3. Stoupos, Nikolaos & Kiohos, Apostolos, 2019. "Scandinavia: Towards the European Monetary Union?," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 278-291.
    4. Nikolaos Stoupos & Apostolos Kiohos, 2021. "BREXIT referendum’s impact on the financial markets in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 1-19, February.

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    More about this item

    Keywords

    Volatility; Exchange rates; ECM-EGARCH; Linkages; EU integration; Brexit;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • F3 - International Economics - - International Finance
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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