New Empirical Evidence on the Costs of European Monetary Union
In order to assess the costs of a European Monetary Union, we use a structural VAR approach based on the long-run identifying scheme pioneered by Blanchard and Quah and extended by others. We then apply the approach to as many EU members as data limitations permit: namely, Germany, Spain, France, Italy, the Netherlands and the United Kingdom. By identifying a separate shock which would cause exchange rate jumps in the short run, we hope to assess the extent to which such jumps would produce short-run movements in prices as opposed to volumes in each country. Thereby, we hope to see how much sacrifice each EU member would suffer from the surrender of independent monetary policy. Similarly, we try to identify a separate shock to home absorption in order to see how much profit each EU member would have in preserving their fiscal policy independence inside of EMU. The asymmetry between the shocks hitting the country members of a monetary union remains an issue in the paper; but it is only one of several.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||May 1995|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |