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The Anticipated and Concurring Effects of the EMU

  • Michele Bagella


    (University of Rome II - Faculty of Economics)

  • Leonardo Becchetti


    (University of Rome II - Faculty of Economics)

  • Iftekhar Hasan


    (Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting)

Reduced exchange rate volatility and higher and less heterogeneous quality of institutional rules and macroeconomic policies are two of the main (anticipated and concurring) effects expected from a currency union. In this paper we measure the magnitude of these two effects for the Eurozone countries looking at real effective exchange rates (REER) and at different indicators of quality of institutional rules and macroeconomic policies (QIRMP). We find that the first effect is much stronger than the second when we compare relative changes for Eurozone countries and the rest of the world in the relevant period. We further evaluate the impact of both effects on economic growth on a larger sample of countries. Our findings show that both have significant impact on levels (more robust) and on rates of growth (weaker) of per capita GDP.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 55.

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Length: 47
Date of creation: 27 May 2004
Date of revision:
Handle: RePEc:rtv:ceisrp:55
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