Inflation persistence in the Euro area before and after the European Monetary Union

2012 ◽  
Vol 29 (4) ◽  
pp. 1170-1176 ◽  
Author(s):  
Barbara Meller ◽  
Dieter Nautz
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
European Monetary ◽  
Inflation Persistence ◽  
Before And After

scholarly journals Analysis of shocks affecting Europe: EMU and some central and eastern acceding countries

2009 ◽  
Vol 56 (1) ◽  
pp. 21-38 ◽  
Author(s):  
Arfa Ben
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Structural Changes ◽  
Output Growth ◽  
Structural Var ◽  
European Countries ◽  
European Monetary ◽  
Demand Shocks ◽  
East European

This paper deals with the synchronization of business cycles and economic shocks between the euro area and acceding countries. We therefore extract the business cycle component of output by using Hodrick-Prescott filter. Supply and demand shocks are recovered from estimated structural VAR models of output growth and inflation using long run restriction (Blanchard and Quah). We then check the (A) symmetry of these shocks by calculating the correlation between euro area shocks and those of the different acceding countries. We find that several acceding countries have a quite high correlation of demand shocks with the euro area however supply shocks are asymmetric; the correlation between euro area and central and east European countries (CEECs) is negative. We therefore conclude that joining the European Monetary Union is not yet possible: central and east European countries have to make structural changes to join the European Monetary Union.

scholarly journals From the European Monetary Union to a euro–bancor: a stock–flow consistent assessment

2018 ◽  
Vol 16 (1) ◽  
pp. 8-26 ◽  
Author(s):  
Jacques Mazier ◽  
Sebastian Valdecantos
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Growth Cycle ◽  
Sustainable Growth ◽  
European Monetary ◽  
Simulation Experiments ◽  
Consistent Assessment ◽  
Current Setting ◽  
Stock Flow

The crisis of the euro area has questioned the fairness, sustainability and viability of the current setting of the European Monetary Union (EMU). In this article we use a four-country stock–flow consistent (SFC) model in the tradition of Godley/Lavoie (2007a) to examine to what extent an adaptation to Europe of Keynes's plan of a clearing union with bancor balances could help reduce the imbalances that, at least in part, drove the eurozone into crisis. Our simulation experiments suggest that the implementation of Keynes's ideas may conduct European countries to a stronger and more sustainable growth cycle.

Is the Euro Working? The Euro and European Labour Markets

2004 ◽  
Vol 24 (2) ◽  
pp. 147-168 ◽  
Author(s):  
STEPHEN J. SILVIA
Keyword(s):  
Monetary Policy ◽  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Structural Adjustment ◽  
Labour Markets ◽  
Fiscal Consolidation ◽  
European Monetary ◽  
Currency Area ◽  
Made In

Now that time has passed since the introduction of the euro as a commercial currency, it is possible to assess many arguments made in the abstract during the 1990s about European monetary union. This article shows that the euro zone still falls short as an optimal currency area in most respects. In particular, it undertakes an empirical analysis of the labour market and finds no progress toward flexibility or integration. These results challenge assertions of ‘endogenous currency area’ proponents that the euro area would become optimal ‘after the fact’, and that labour markets would serve as the principal avenue of adjustment. Instead, a ‘rigidity trap’ has developed in the euro area, consisting of relatively tight monetary policy, forced fiscal consolidation, and a risk of deflation in some economies. These conditions have compounded the difficulties of structural adjustment in European labour markets.

scholarly journals OCA INDEX AS INDICATOR OF THE CZECH REPUBLIC'S PREPAREDNESS TO JOIN THE EUROPEAN MONETARY UNION

2021 ◽  
Vol 11 (2) ◽  
pp. 91-94
Author(s):  
SARKA HYBLEROVA
Keyword(s):  
Czech Republic ◽  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Common Currency ◽  
European Monetary ◽  
The Czech Republic ◽  
Currency Area ◽  
Using Data ◽  
Key Indicators

The optimum currency area (OCA) theory evaluates the currency area as optimum at a time when the participating countries are not at risk of macroeconomic instability due to the existence of a common currency. The OCA index is a tool used to comprehensively assess the costs and benefits of a candidate for joining a monetary union. It is constructed as a bilateral index assessing the appropriateness of introducing the single currency in two countries. The article presents the OCA index quantified for the Czech Republic in relation to Germany, which is considered to be the core of the European Monetary Union. Since the OCA index needs to be interpreted in a temporal or spatial comparison, the calculation of the OCA index was also performed for other countries of the Visegrad Group (V4) and furthermore for Austria and Portugal, using data from the period of 2007–2019. The results of the OCA index show a high degree of variability in the Czech Republic in the observed period. While in the first half of the period under review, the Czech Republic achieved the best results within the assessed economies and the Czech Republic's level of preparedness for the common currency with Germany was higher than in the case of Austria, it fell sharply after 2012. The reason can be seen, among other things, in the higher growth rate of the Czech economy than in the euro area. Although the OCA index is an indicator assessing the preparedness of an economy to join a monetary union, it cannot be the only indicator. Other important criteria include, for example, labour mobility, price and wage flexibility, fiscal integration and more. Although the Czech Republic is approaching the euro area average in all key indicators, the gap from it remains significant for most indicators and thus continues to be a factor against the adoption of the euro in the coming years.

scholarly journals From the European Monetary Union to a euro–bancor: a stock–flow consistent assessment

2019 ◽  
Vol 16 (1) ◽  
pp. 8-26
Author(s):  
Jacques Mazier ◽  
Sebastian Valdecantos
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Growth Cycle ◽  
Sustainable Growth ◽  
European Monetary ◽  
Simulation Experiments ◽  
Consistent Assessment ◽  
Current Setting ◽  
Stock Flow

The crisis of the euro area has questioned the fairness, sustainability and viability of the current setting of the European Monetary Union (EMU). In this article we use a four-country stock–flow consistent (SFC) model in the tradition of Godley/Lavoie (2007a) to examine to what extent an adaptation to Europe of Keynes's plan of a clearing union with bancor balances could help reduce the imbalances that, at least in part, drove the eurozone into crisis. Our simulation experiments suggest that the implementation of Keynes's ideas may conduct European countries to a stronger and more sustainable growth cycle.

scholarly journals The Real Effects of European Monetary Union

2006 ◽  
Vol 20 (4) ◽  
pp. 47-66 ◽  
Author(s):  
Philip R Lane
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Economic Downturn ◽  
Relative Importance ◽  
European Monetary ◽  
Real Effects ◽  
Inflation Differentials ◽  
Exchange Rate Movements ◽  
The Impact

We explore the impact of European monetary union on the economies of the member countries. Inflation differentials across the euro area have been persistent, such that cumulative real exchange rate movements across the euro area have been quite substantial. The adoption of the euro has indeed contributed to greater economic integration; however, economic linkages with the rest of the world have also been growing strongly, such that the relative importance of trade within the European monetary union has not dramatically increased. In terms of future risks, a severe economic downturn or financial crisis in a member country will be the proving ground for the future political viability of the euro.

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