IDEAS home Printed from https://ideas.repec.org/a/pal/imfecr/v72y2024i1d10.1057_s41308-023-00223-w.html
   My bibliography  Save this article

Currency Areas, Labor Markets, and Regional Cyclical Sensitivity

Author

Listed:
  • Katheryn N. Russ

    (University of California, Davis
    National Bureau of Economic Research)

  • Jay C. Shambaugh

    (National Bureau of Economic Research
    George Washington University)

  • Sanjay R. Singh

    (University of California, Davis
    Federal Reserve Bank of San Francisco)

Abstract

In his papers during the lead up to the birth of the European Monetary Union, Obstfeld considered whether the countries forming the EMU were sufficiently similar to survive a single monetary policy—and more importantly, whether they had the capacity to adjust to asymmetric shocks given a single monetary and exchange rate policy. The convention at the time was to take the United States as the baseline for a smoothly functioning currency union. We expand on stylized facts in the literature to illustrate how stratification in local labor market outcomes appears far more persistent in later years than 3 decades ago in the context of what (Obstfeld and Peri in Econ Policy 13(26):205–259, 1998) call non-adjustment in unemployment rates. We then extend the currency union literature by adding an additional consideration: differences in regional cyclical sensitivity. Using measures of cyclicality and Obstfeld–Peri-type non-adjustment, we explore the characteristics of places that can get left behind when local labor markets respond differently to national shocks and discuss implications for policy.

Suggested Citation

  • Katheryn N. Russ & Jay C. Shambaugh & Sanjay R. Singh, 2024. "Currency Areas, Labor Markets, and Regional Cyclical Sensitivity," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(1), pages 152-195, March.
    • Handle: RePEc:pal:imfecr:v:72:y:2024:i:1:d:10.1057_s41308-023-00223-w
    DOI: 10.1057/s41308-023-00223-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41308-023-00223-w
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41308-023-00223-w?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
    ---><---

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

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

    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:pal:imfecr:v:72:y:2024:i:1:d:10.1057_s41308-023-00223-w. 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.

    We have no bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    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.