scholarly journals Export specialisation and output synchronisation in the euro area: The case of Southern countries

2016 ◽  
Vol 66 (4) ◽  
pp. 617-637
Author(s):  
Sofia Helena Gouveia
Keyword(s):  
Business Cycles ◽  
Euro Area ◽  
Successful Implementation ◽  
European Monetary ◽  
Member States ◽  
Sectoral Structure ◽  
Optimum Currency ◽  
Southern European Countries ◽  
Of Greece

Business cycle synchronisation and the similarity in the sectoral structure of exports are key conditions for the successful implementation of common monetary policy, as shown by the theory of Optimum Currency Areas. This paper examines the degree of correlation between the aggregate euro area and 12 member states’ business cycles and the role of their exports specialisation dynamics vis-à-vis the euro area over the period 1981–2012, focusing in particular on Southern European countries. Overall, we find that since the inception of the European Monetary Union, the business cycles of euro area member states have been increasingly synchronised with the aggregate euro area cycle, with the exception of Greece. We also document that changes in the Greek, Portuguese, and Spanish export structures brought these countries closer to the euro area structure as a whole. Furthermore, we find a positive and significant relationship between the similarity of export structures and GDP cyclical correlations.

scholarly journals Determinants of Business Cycles Synchronization in the European Union and the Euro Area

Equilibrium ◽  
2013 ◽  
Vol 8 (4) ◽  
pp. 25-48 ◽  
Author(s):  
Krzysztof Beck
Keyword(s):  
European Union ◽  
Data Analysis ◽  
Business Cycles ◽  
Euro Area ◽  
Panel Data Analysis ◽  
Monetary Integration ◽  
The European Union ◽  
Main Determinants ◽  
Optimum Currency ◽  
Of Greece

Further economic and monetary integration in Europe is currently on hold due to the crisis and even questions about the possible exile of Greece. Especially in those conditions, it is important, to see whether integrated Europe can handle future problems and if economic and monetary integration can be helpful or rather more problematic. The main aim of this paper is to check to what degree business cycles are synchronized in the Eurozone and the European Union and what the main determinants of business cycles synchronization are. To achieve this, the following steps have been taken. Firstly, we turn to optimum currency area theory, to see what conditions need to be met, if the European Union and the euro area can use common monetary policy to deal with some economic shocks. Then, all necessary methodological explanations are presented. Later on, the preliminary data analysis is employed to see how business cycles and their determinants were acting during the last 20 years. Finally, panel data analysis is used to check how those determinants actually influence business cycles synchronization. The main finding of the article is that even though business cycles synchronization has been progressing in the European Union and the euro area so does the specialization – divergence in production structure. This may result in less synchronized business cycles in the future.

Introduction

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Euro Area ◽  
European Central Bank ◽  
International Political Economy ◽  
Euro Crisis ◽  
European Monetary ◽  
Member States ◽  
European Central ◽  
Regime Complex ◽  
The International Monetary Fund ◽  
European Monetary Fund

European governments, against their initial instincts, invited the International Monetary Fund to design financial rescue programs during the euro crisis in cooperation with the European Commission and European Central Bank. These institutions, known as the “troika,” constitute a regime complex in the parlance of international political economy. This book poses four questions about the regime complex for crisis finance in the euro area: Why did European governments choose this particular mix of institutions? What was the strategy of key member states in directing several institutions to collaborate on lending programs? Why did this arrangement endure despite severe conflicts among the institutions? Should the member states of the euro area “go it alone” by creating a European Monetary Fund? This chapter elaborates on these questions and provides an overview of the book.

scholarly journals Synchronization of business cycles in the selected European countries

2013 ◽  
Vol 60 (6) ◽  
pp. 759-773 ◽  
Author(s):  
Sasa Obradovic ◽  
Vladimir Mihajlovic
Keyword(s):  
Business Cycles ◽  
Foreign Trade ◽  
Correlation Coefficient ◽  
Euro Area ◽  
Pearson Correlation ◽  
Rank Correlation ◽  
Optimum Currency Area ◽  
Trade Volume ◽  
Currency Area ◽  
Optimum Currency

The synchronization of business cycles represents one of the conditions that countries have to fulfil to become part of an optimum currency area, as well as a condition for the efficient implementation of a common economic policy in these countries. This paper examines the extent to which Serbia and its neighbouring countries fulfil these conditions, taking the euro area as an optimum currency area. By applying the Hodrick-Prescott and the band-pass filters, as well as the Pearson correlation coefficient and the Spearman rank correlation coefficient, this paper examines the synchronization of business cycles in these countries. Taking Serbia as an example, the influence of the foreign trade volume between two countries on the similarity of their business cycles is tested. The results show a lower harmonization of business cycles in Serbia with those in the euro area, when compared with the selected neighbouring countries, and do not confirm the thesis on the influence of the foreign trade volume on the harmonization of business cycles.

scholarly journals THE ROLE OF ASEAN EXCHANGE RATE UNIT (AERU) FOR ASEAN-5 MONETARY INTEGRATION: AN OPTIMUM CURRENCY AREA CRITERIA

2013 ◽  
Vol 15 (3) ◽  
pp. 59-88
Author(s):  
Dimas Bagus Wiranata Kusuma ◽  
Syed Mohammed Abud Ashif ◽  
Ali Musa Harahap ◽  
Muhammad Alam Omarsyah
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Convergence Theory ◽  
Monetary Integration ◽  
Optimum Currency Area ◽  
Member States ◽  
Currency Area ◽  
National Currencies ◽  
Optimum Currency

The idea for regional monetary integration is grounded by the process of convergence theory within the member states. The paper analyses the possibility of monetary union in ASEAN-5 countries, Indonesia, Malaysia, Philippines, Thailand, and Singapore. In terms of volatility, by using nominal deviation indicator assessment, the ASEAN-5 currencies are suggested to peg their national currencies into Yuan since it empirically brings the lowest level of volatility, both during normal and crisis periods. Therefore, Yuan could be proposed as the anchor currency for ASEAN-5 countries. Moreover, valuing the AERU in terms of a weighed average of Yuan is important to determine which countries are considered to be an Optimum Currency Area (OCA). The results statistically suggest that all ASEAN-5 countries could be grouped as OCA according to exchange rate stability criterion.Keywords : Optimum Currency Area, AERU, ASEAN-5, Exchange Rate StabilityJEL Classification : D81, E52, F15, F36

Recommendations

2020 ◽  
pp. 303-330
Author(s):  
Menelaos Markakis
Keyword(s):  
Euro Area ◽  
Technical Assistance ◽  
Fiscal Rules ◽  
Banking Union ◽  
Euro Crisis ◽  
Member States ◽  
Capital Markets Union ◽  
The Eu ◽  
Transparency And Accountability

This chapter draws together the implications of the Euro crisis for the EU and its Member States and critically evaluates the shortcomings of the Treaty schema in terms of transparency and accountability. The discussion begins with the measures intended to ‘complete’ and ‘deepen’ the Economic and Monetary Union (EMU). It sets out the author’s own view regarding the key reforms that would be necessary, albeit one that is informed by the proposals made by the EU institutions. These include a reform of the EU fiscal rules; the provision of technical assistance to Member States implementing structural reforms; establishing a Euro area stabilization function; completing the Banking Union and making progress towards a Capital Markets Union; and strengthening the role of EU financial watchdogs. This chapter further puts forward a number of concrete proposals on how to bolster transparency and accountability in the area of EMU, the dividing line being between those proposals that could be implemented without a Treaty amendment and those reforms that would require a Treaty revision. It further addresses separately accountability (and transparency) in the Banking Union, as well as the role of EU courts in the EMU.

Euro-area reforms will reinforce fiscal consolidation

2020 ◽  
Keyword(s):  
Euro Area ◽  
European Countries ◽  
Bank Failures ◽  
Fiscal Consolidation ◽  
National Parliaments ◽  
Member States ◽  
Content Type ◽  
Southern European Countries

Significance The reforms would allow the ESM, which provides emergency loans to distressed member states, to offer greater assistance to banks and enhance its capacity to design and implement bailout programmes. They will enter into force once ratified by national parliaments. Impacts The reforms will boost confidence in EU markets and reduce the risk of contagion from bank failures. The ESM will remain politically divisive, especially in southern European countries. Pressure will grow on governments to prioritise fiscal consolidation from 2022, threatening to undermine growth in weaker economies.

scholarly journals Prospects for a Euro-Area Budget: An Analytical Outline

European View ◽  
2017 ◽  
Vol 16 (2) ◽  
pp. 211-218
Author(s):  
Siegfried Mureşan
Keyword(s):  
Moral Hazard ◽  
European Commission ◽  
Monetary Union ◽  
Euro Area ◽  
Economic And Monetary Union ◽  
Structural Reforms ◽  
Member States ◽  
Key Issues ◽  
The Creation

In a reflection paper intended to generate debate among euro-area governments, the European Commission has put forward ideas on what could be done to deepen the Economic and Monetary Union by 2025. One of the ideas outlined by the Commission is the creation of a euro-area budget. This article reviews the key issues that are relevant in the discussion on establishing such a budget; outlines the possible functions of such a budget, such as incentivising structural reforms or ensuring macro-stabilisation; and discusses the issues of size, funding, moral hazard and governance, while touching upon the role of non-euro-area member states. The article concludes with the assertion that the answer to this question is essentially political in nature and could constitute an example of how member states are ready to integrate further, while giving non-euro-area member states the opportunity to participate.

MEASURING THE INTERMITTENT SYNCHRONICITY OF MACROECONOMIC GROWTH IN EUROPE

2011 ◽  
Vol 21 (04) ◽  
pp. 1215-1231 ◽  
Author(s):  
PATRICK M. CROWLEY ◽  
AARON SCHULTZ
Keyword(s):  
Business Cycles ◽  
International Business ◽  
Euro Area ◽  
Growth Rates ◽  
Regional Integration ◽  
Growth Patterns ◽  
International Business Cycles ◽  
Dominant Factor ◽  
Member States ◽  
International Business Cycle

Synchronization of growth rates are an important feature of international business cycles, particularly in relation to regional integration projects such as the single currency in Europe. Synchronization of growth rates clearly enhances the effectiveness of European Central Bank monetary policy, ensuring that policy changes are attuned to the dynamics of growth and business cycles in the majority of member states. In this paper, a dissimilarity metric is constructed by measuring the topological differences between the GDP growth patterns in recurrence plots for individual countries. The results show that synchronization of growth rates were higher among the euro area member states during the second half of the 1980s and from 1997 to roughly 2002. Apart from these two time periods, euro area member states do not appear to be more synchronized than a group of major international countries, suggesting that apart from specific times when European integration initiatives were being implemented, globalization was likely the dominant factor behind international business cycle synchronization.

scholarly journals Governance and Institutions for Stability and Growth in the Eurozone

2018 ◽  
pp. 108-125
Author(s):  
Daniele Schiliro
Keyword(s):  
European Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Economic Recovery ◽  
The European Union ◽  
New Governance ◽  
Member States ◽  
The Face ◽  
Consistent Approach

This chapter aims to contribute to the debate on which kinds of governance and institutions are needed to ensure stability and growth in the Eurozone. Despite the economic recovery, the Eurozone does not have effective institutions to ensure stability in the face of a new economic crisis (without forgetting legitimacy, transparency, and the ability to meet the expectations of greater prosperity for Euro-area citizens). This chapter supports the view of a deep rethinking of the European monetary union (EMU) with a different governance and institutions. The new governance should imply a renewed political agreement among member states in both the Eurozone and the European Union (EU). This political agreement must lead to a reconsideration of the Maastricht parameters, a different approach of European institutions, and a change of the EU treaty. This chapter also discusses the role of institutions in balancing European interests with those of member states to provide a consistent approach to stability and growth.

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