IDEAS home Printed from https://ideas.repec.org/a/oup/oxecpp/v57y2005i3p373-397.html
   My bibliography  Save this article

Regional cyclical asymmetries in an optimal currency area: an analysis using US state data

Author

Listed:
  • Mark D. Partridge
  • Dan S. Rickman

Abstract

Two key assumptions are often used in assessing the feasibility of a common currency area (CCA). First, asymmetric shocks increase the costs of forming a CCA. Second, the US represents a useful benchmark for evaluating a potential CCA. Changes in the asymmetry of US regional cycles, however, are rarely examined. Therefore, this study examines the synchronization of US regional business cycles for 1971--98. The results reveal that US state cyclical asymmetries changed over time, with synchronization appearing to decline by the latter 1980s. This suggests that the US was less likely to fit CCA criteria in the 1990s, which conflicts with its apparent successful monetary-policy experience. Yet, this seeming contradiction can be explained by a tradeoff between the volatility of the common-national business cycle and regional synchronization. Given that the volatility of an area's common shock can change regularly, these findings have implications for the assessment of all CCAs. Copyright 2005, Oxford University Press.

Suggested Citation

  • Mark D. Partridge & Dan S. Rickman, 2005. "Regional cyclical asymmetries in an optimal currency area: an analysis using US state data," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 373-397, July.
  • Handle: RePEc:oup:oxecpp:v:57:y:2005:i:3:p:373-397
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/oep/gpi022
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    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:oup:oxecpp:v:57:y:2005:i:3:p:373-397. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: https://academic.oup.com/oep .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.