The Real Exchange Rates in the European Monetary Union are Random Walks

2018 ◽  
Author(s):  
Rainer Maurer
Keyword(s):  
Exchange Rates ◽  
Random Walks ◽  
Monetary Union ◽  
European Monetary Union ◽  
Real Exchange Rates ◽  
European Monetary ◽  
The Real

The Time Series Properties of the Real Exchange Rates Between the Member States of the European Monetary Union

2019 ◽  
Vol 52 (2) ◽  
pp. 149-171
Author(s):  
Rainer Maurer
Keyword(s):  
Time Series ◽  
Exchange Rates ◽  
Random Walks ◽  
Monetary Union ◽  
European Monetary Union ◽  
Real Exchange Rates ◽  
Jel Classification ◽  
European Monetary ◽  
Member States ◽  
The Real

Abstract The article “The Time Series Properties of the Real Exchange Rates Between the Member States of the European Monetary Union” analyses the time series behavior of the components of the real exchange rates between the founding member states of the EMU before and after the start of the EMU. Various panel and univariate country-specific tests show that the levels of these components are typically random walks. The resulting real exchange rates are also random walks and their components are not cointegrated. It is argued that these results question the operability of the EMU under the current policy regime in the long-run. One possibility to deal with this problem could be the suspension of the principle of a “single monetary policy”. Die Zeitreiheneigenschaften der realen Wechselkurse der Mitgliedsländer der Europäischen Währungsunion Zusammenfassung Der Artikel „Die Zeitreiheneigenschaften der realen Wechselkurse der Mitgliedsländer der Europäischen Währungsunion“ untersucht das Zeitreihenverhalten der Komponenten der realen Wechselkurse zwischen den Gründerstaaten der EWU vor und nach dem Beginn der EWU. Verschiedene Panel- und univariate länderspezifische Test zeigen, dass die Niveaus dieser Komponenten typischerweise Zufallspfaden folgen. Die resultierenden realen Wechselkurse folgen ebenfalls Zufallspfaden und ihre Komponenten sind nicht kointegriert. Diese Ergebnisse, so schließt der Artikel, stellen die langfristige Funktionsfähigkeit der EWU unter dem gegenwärtigen geldpolitischen Regime in Frage. Eine Möglichkeit, dieses Problem zu adressieren, könnte in der Preisgabe des Prinzips der einheitlichen Geldpolitik bestehen. JEL Classification: E50, E31, C12

Three Leaps in the Dark, 1950–1982

2018 ◽  
Author(s):  
Ashoka Mody
Keyword(s):  
Exchange Rates ◽  
Monetary Union ◽  
European Monetary Union ◽  
Economic Problem ◽  
European Monetary ◽  
Economic Problems ◽  
Treaty Of Rome ◽  
Post War ◽  
Practical Sense

This chapter describes the evolution of Europe's monetary union as a French initiative motivated by goal of achieving monetary and economic parity with Germany. The Schuman Declaration in 1950 brought European nations together in a spirit of reconciliation and laid the preparatory basis for post-War Europe. In 1957, the Treaty of Rome enabled the flowering of the European community—which, by the mid-1960s, had completed its primary task of establishing an institutional framework for cooperative coexistence and, by opening trade borders, had enhanced the material capabilities of the nation state. However, the European monetary union project in 1969 resulted in severe economic problems. Forcing one monetary policy on divergent nations made no logical or practical sense. Thus, repeated efforts to fix exchange rates predictably failed. Ultimately, the pursuit of monetary union created great risks and did little for Europe's real economic problem of generating long-term growth and reducing unemployment.

The Real Effects of European Monetary Union

CFA Digest ◽  
2007 ◽  
Vol 37 (2) ◽  
pp. 26-27
Author(s):  
Jonathan Wheeler Hubbard
Keyword(s):  
Monetary Union ◽  
European Monetary Union ◽  
European Monetary ◽  
The Real ◽  
Real Effects
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