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European economic integration and (a)symmetry of macroeconomic fluctuations

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  • Economidou, Claire
  • Kool, Clemens

Abstract

This paper empirically investigates output and consumption asymmetries in the Eurozone and enlarged EU over the period 1992-2007, and their consequences for monetary policy. Our results reveal that in the Eurozone output asymmetry has remained practically unaltered; however, there is some indication of greater consumption smoothing. The UK, Denmark and Sweden are no less asymmetric than the average Eurozone member state and could probably enter the EMU without significant macroeconomic costs. New EU member states are diverse but display higher output and, in particular, consumption asymmetries. This warrants some caution against too quick expansion of the EMU.

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  • Economidou, Claire & Kool, Clemens, 2009. "European economic integration and (a)symmetry of macroeconomic fluctuations," Economic Modelling, Elsevier, vol. 26(4), pages 778-787, July.
    • Handle: RePEc:eee:ecmode:v:26:y:2009:i:4:p:778-787
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    More about this item

    Keywords

    Integration Macroeconomic asymmetries Welfare gains Risk sharing Euro;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration

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