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The Impact of the Key Structural Shifts on Euro Area's Endogeneity Formation

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  • Wi-Dae, Kim

    (Korea Center for International Finance, Seoul, Republic of Korea)

Abstract

This article tests the change in OCA (Optimal Currency Area) endogeneity, respectively before and after the Euro launch and Fiscal crisis, to assess how much improvement has been achieved after those structural shifts. Improving upon the existing literature, the test methodology presented here proffers a new standardized tool. The launch of the euro has generally improved endogeneity more compared to the fiscal crisis; but, especially in the southern European countries, the result was quite the opposite. Germany and France showed relatively low endogeneity improvement after both the periods, which might contribute to the severe economic slowdown these leader countries have experienced after the Covid era. These results support that a significant delay in endogenous improvements could weaken the region's competitiveness and undermine the depth of economic integration in the euro area.

Suggested Citation

  • Wi-Dae, Kim, 2025. "The Impact of the Key Structural Shifts on Euro Area's Endogeneity Formation," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 40(2), pages 275-290.
    • Handle: RePEc:ris:integr:0944
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    More about this item

    Keywords

    Euro; OCA; Endogeneity; Fiscal crisis; Convergence;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F15 - International Economics - - Trade - - - Economic Integration
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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