IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3950.html
   My bibliography  Save this paper

Is There a Conflict Between EC Enlargement and European Monetary Unification?

Author

Listed:
  • Tamim Bayoumi
  • Barry Eichengreen

Abstract

Recent proposals for enlarging the European Community to include the EFTA countries raise the question of whether the new members should participate in a European Monetary Union. In part, the issue hinges on the incidence of aggregate supply and demand disturbances. We use data on prices and output and a VAR decomposition to analyze this issue empirically, grouping economies according to the magnitude of the disturbances, their cross-country correlation, and speeds of response. This leads us to distinguish an EC "core" (made up of Germany and its immediate neighbors) and an EC periphery (made up of the UK and the Southern European members of the Community). Austria, Sweden and Switzerland behave more similarly to the EC core than do Norway, Finland and Iceland. This suggests that the case for EMU participation is stronger for Austria, Sweden and Switzerland than for the other EFTA countries.

Suggested Citation

  • Tamim Bayoumi & Barry Eichengreen, 1992. "Is There a Conflict Between EC Enlargement and European Monetary Unification?," NBER Working Papers 3950, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3950
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3950.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barry Eichengreen, 1992. "Is Europe an Optimum Currency Area?," Palgrave Macmillan Books, in: Silvio Borner & Herbert Grubel (ed.), The European Community after 1992, chapter 8, pages 138-161, Palgrave Macmillan.
    2. Morris Goldstein & Geoffrey Woglom, 2017. "Market-based Fiscal Discipline in Monetary Unions: Evidence from the US Municipal Bond Market," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 4, pages 127-163, World Scientific Publishing Co. Pte. Ltd..
    3. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    4. Gylfason, Thorvaldur, 1991. "Iceland on the Outskirts of Europe: The Common Property Resource Problem," CEPR Discussion Papers 530, C.E.P.R. Discussion Papers.
    5. Lippi, Marco & Reichlin, Lucrezia, 1993. "The Dynamic Effects of Aggregate Demand and Supply Disturbances: Comment," American Economic Review, American Economic Association, vol. 83(3), pages 644-652, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joseph A. Whitt, 1995. "European Monetary Union: evidence from structural VARs," FRB Atlanta Working Paper 95-1, Federal Reserve Bank of Atlanta.
    2. Bayoumi, Tamim & Eichengreen, Barry, 1994. "Macroeconomic Adjustment under Bretton Woods and the Post-Bretton-Woods Float: An Impulse-Response Analysis," Economic Journal, Royal Economic Society, vol. 104(425), pages 813-827, July.
    3. Ansgar Belke & Clemens Domnick & Daniel Gros, 2017. "Business Cycle Synchronization in the EMU: Core vs. Periphery," Open Economies Review, Springer, vol. 28(5), pages 863-892, November.
    4. Faust, Jon & Leeper, Eric M, 1997. "When Do Long-Run Identifying Restrictions Give Reliable Results?," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 345-353, July.
    5. Michel Beine & FréDéric Docquier, 1998. "A Stochastic Simulation Model of an Optimum Currency Area," Open Economies Review, Springer, vol. 9(3), pages 229-257, July.
    6. Dumitriu, Ramona & Stefanescu, Răzvan, 2020. "Iluzii financiare, Partea întâi [Financial Illusions, Part 1]," MPRA Paper 101201, University Library of Munich, Germany, revised 17 Jun 2020.
    7. Nephil Matangi Maskay, 2001. "South Asian Monetary Integration in Light of the Optimum Currency Area Criterion of Patterns of Shocksâ€," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 2(2), pages 203-219, September.
    8. Barry Eichengreen., 1992. "The Political Economy of Fiscal Policy After EMU," Center for International and Development Economics Research (CIDER) Working Papers C92-004, University of California at Berkeley.
    9. Paul Grauwe, 1996. "The economics of convergence: Towards monetary union in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(1), pages 1-27, March.
    10. Houssa, Romain, 2008. "Monetary union in West Africa and asymmetric shocks: A dynamic structural factor model approach," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 319-347, February.
    11. Armand-Denis Schor, 2000. "La théorie des zones monétaires optimales : l’optimum, le praticable, le crédible et le réel," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 545-576.
    12. Alan Carruth & Heather Gibson & Euclid Tsakalotos, 1999. "Are Aggregate Consumption Relationships Similar Across the European Union?," Regional Studies, Taylor & Francis Journals, vol. 33(1), pages 17-26.
    13. Eleni Roussou & Norman Cameron, 2005. "The Impact of the European Economic & Monetary Union on the Stability of the Greek Economy," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 85-98.
    14. Gammadigbé, Vigninou, 2013. "Endogénéité des critères d'une zone monétaire optimale: un réexamen [Endogeneity of the optimum currency area criteria: a re-examination]," MPRA Paper 46727, University Library of Munich, Germany.
    15. Michael B. Devereux & Charles Engel & CÈdric Tille, 2003. "Exchange Rate Pass-Through and the Welfare Effects of the Euro," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 223-242, February.
    16. Nephil Matangi Maskay, 2000. "A cautionary note in using patterns of shocks to determine optimal exchange rate policy. An exploration of Nepalese and Indian exchange rate relations: 1964-1994," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 491-497.
    17. Parviainen, Seija, 1998. "Redistribution and Risk Sharing in EMU," Discussion Papers 159, VATT Institute for Economic Research.
    18. Weber, Axel A., 1996. "Germany before and after unification: A structural VAR analysis," Economic Modelling, Elsevier, vol. 13(4), pages 575-601, October.
    19. Békés, Gábor, 1998. "Optimális valutaövezetek, gazdasági integráltság és hasonlatosság: az Európai Unió példája [Optimum currency areas, economic similarity and integration. The European case]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 709-737.
    20. De Grauwe, Paul, 1996. "Monetary union and convergence economics," European Economic Review, Elsevier, vol. 40(3-5), pages 1091-1101, April.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance

    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:nbr:nberwo:3950. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    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.