scholarly journals The euro area ten years after its creation: (Divergent) competitiveness and the optimum currency area theory

2011 ◽  
Vol 58 (5) ◽  
pp. 605-629 ◽  
Author(s):  
João Rebelo ◽  
Henrique Alves
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Descriptive Analysis ◽  
Output Growth ◽  
Optimum Currency Area ◽  
Currency Area ◽  
European Sovereign Debt Crisis ◽  
Oca Criteria ◽  
Optimum Currency ◽  
The Impact

As the euro is on its second decade, the European sovereign debt crisis and the ever more evident disparities in competitiveness among member states are prompting many to question whether monetary union is bringing more benefits than costs. The optimum currency area (OCA) theory provides a framework with several criteria for such analysis. In such context, we start by a descriptive analysis of the first twelve euro countries under six criteria, leading to a mixed conclusion on whether the EMU is closer or farther to fulfil them. Then we assess the impact of five OCA criteria on countries? relative competitiveness. Differences in the growth of unit labour costs, the dissimilarity of trade and the differences in output growth were found to be the most significant. This way, we identify some causes of the divergent competitiveness between some EMU countries that contributed to weaker economic growth in some of them.

On Financial Contagion Through ETFs

2020 ◽  
pp. 82-101
Author(s):  
Alexia Thomaidou ◽  
Dimitris Kenourgios
Keyword(s):  
Financial Crisis ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Financial Contagion ◽  
Sovereign Debt Crisis ◽  
European Sovereign Debt Crisis ◽  
The Interest Rate ◽  
The Global Financial Crisis ◽  
The Impact

This chapter investigates the impact of the Global Financial Crisis and the European Sovereign Debt Crisis in ETFs across regions and segments. In particular, two tests are taking place, with the first one to examine if there is evidence of contagion effect and the second one to test the affection of risks in each pair of ETFs. The evidence across the stable period and the two crisis periods suggests the existence of the transmission of shocks from the Global Financial ETF to regional and sectoral ETFs. However, there is evidence that some of the ETFs remain less unaffected during both crises and some of them are immune. Moreover, the authors examine the impact of several control variables, which represent various risks, to the correlation of each pair of ETFs and the results show the influence of the interest rate risk and interbank liquidity risk during the Global Financial Crisis and the European Sovereign Debt Crisis.

scholarly journals European Sovereign Debt Crisis and its Impact on Financial Markets and Institutions

2015 ◽  
Vol 2 (3) ◽  
pp. 113-120
Author(s):  
Afzal Ahmad
Keyword(s):  
Gross Domestic Product ◽  
Financial Institutions ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Domestic Product ◽  
Sovereign Debt Crisis ◽  
Policy Makers ◽  
Markets And Institutions ◽  
European Sovereign Debt Crisis ◽  
The Impact

This paper examines the European sovereign debt crisis that began in 2009; it mostly considers Greece and then Italy and Portugal since they were affected by the crisis.  It gives the emergence and the causes of the crisis as well as its effect on their debt as a percentage to Gross Domestic Product and their Real Gross Domestic Product.  It also analyses the impact on sovereign bond and its yields, the stock, gold, derivatives and forex markets, including the impact on financial institutions, it uses graphical illustrations from Bloomberg to back the analysis.  It further assesses the measures taken so far by policy makers and financial institutions to curb the situation.  It finally considers the impact of the crisis on financial landscape and lessons learnt from it.

Should the UK Join Emu?

2000 ◽  
Vol 171 ◽  
pp. 70-81 ◽  
Author(s):  
Michael Artis
Keyword(s):  
Optimum Currency Area ◽  
The Core ◽  
Currency Area ◽  
Final Verdict ◽  
The Uk ◽  
Oca Criteria ◽  
Optimum Currency

This article considers the economic case for UK membership of EMU. Traditional optimum currency area (OCA) analysis provides only a weak case for membership: the UK is located among the periphery and not in the core. Considerations of the possible costs of isolation (the risks of trade discrimination and the dangers of a volatile currency) together with some pertinent qualifications of OCA analysis (the possible endogeneity of the OCA criteria) serve to strengthen the case for joining. Whilst it is not overwhelming, the final verdict is positive.

scholarly journals MACROECONOMIC SHOCKS ASYMMETRY: SEE AS AN OPTIMAL CURRENCY AREA

2013 ◽  
Vol 6 (2) ◽  
Author(s):  
Gjorgji Gockov ◽  
Kiril Jovanovski
Keyword(s):  
Currency Union ◽  
Optimum Currency Area ◽  
Common Currency ◽  
Macroeconomic Policies ◽  
Macroeconomic Shocks ◽  
Currency Area ◽  
Asymmetric Shocks ◽  
Key Variables ◽  
Oca Criteria ◽  
Optimum Currency

This paper has the goal to evaluate the existence of asymmetry of macroeconomic shocks between the SEE countries. It focuses on the Optimum Currency Area (OCA) theory to determine the readiness of any country to participate in a monetary union. The main goal of the study is to evaluate the OCA criteria for Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Macedonia, Montenegro, Kosovo, Serbia and Slovenia. The focus will be on the trade and financial links among these countries, the harmonization of business cycles and the similarities in the inflation movements. Going through often cited criteria for a successful currency union the paper will try to give conclusion for the possibilities to use the benefits of the OCA in the region.The paper will contribute with its assumptions that will be used in assessing the feasibility of a common currency area (CCA). That assumption will focus on the existence of the asymmetric shocks that will increase the costs of forming a CCA in SEE countries. In this paper, the comparative analysis of the key variables, policies and recommendations, gives profound basis for making conclusions related to the different macroeconomic policies behavior in terms of bad economic performance. Identification of the imbalances, national or international should give an answer for the dilemmas about the consistency of certain measure in terms of OCA.

Optimum Currency Area Theory and Business Cycle Convergence in EMU

2016 ◽  
pp. 67-91
Author(s):  
Emin Ertürk ◽  
Derya Yılmaz ◽  
Işın Çetin
Keyword(s):  
Monetary Policy ◽  
Business Cycles ◽  
Business Cycle ◽  
Debt Crisis ◽  
Optimum Currency Area ◽  
Currency Area ◽  
The Business Cycle ◽  
The Times ◽  
Optimum Currency ◽  
Over Time

Which countries should be in Economic and Monetary Union (EMU)? This question has been debated frequently in the aftermath of the Sovereign Debt Crisis. But this has been asked in every stages of European integration. This discussion has rooted in the Optimum Currency Area (OCA) theory. The theory simply reveals that; if the countries have similar business cycles, one size fits all monetary policy would able to address the problems of member countries. Otherwise, no single monetary policy could be able to satisfy all members. In this respect, we test the business cycle convergence in EMU12 countries over time and we have also analyzed the effects of crisis on this convergence. We have found that business cycles converged over time in these countries. This convergence rises in the times of crisis as they slump together after the shock, but falls sharply in the aftermath of the crisis. This reflects the divergent recovery paths of the countries and put a pressure on single monetary policy especially after crisis.

scholarly journals Economic crisis and stillbirth ratios: Evidence from Southern Europe

PLoS ONE ◽  
2021 ◽  
Vol 16 (11) ◽  
pp. e0259623
Author(s):  
Cleon Tsimbos ◽  
Georgia Verropoulou ◽  
Dimitra Petropoulou
Keyword(s):  
Adverse Effect ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Economic Recession ◽  
Vital Statistics ◽  
Economic Indicators ◽  
Sovereign Debt Crisis ◽  
European Sovereign Debt Crisis ◽  
The Impact ◽  
Southern European Countries

In this paper we assess the impact of the recent European recession on stillbirth indices over the course of the 2000s and 2010s; the analysis focuses on four Southern European countries (Greece, Italy, Spain, Portugal), which were seriously affected by the sovereign debt crisis from around 2008 to 2017. We use national vital statistics and established economic indicators for the period 2000–2017; stillbirth ratios (stillbirths per 1000 livebirths) are the chosen response variable. For the purpose of the study, we employ correlation analysis and fit regression models. The overall impact of economic indicators on the stillbirth indices is sizeable and statistically robust. We find that a healthy economy is associated with low and declining levels of stillbirth measures. In contrast, economic recession appears to have an adverse effect (Greece, Italy and Spain), or an unclear impact (Portugal), on the stillbirth outcome. This study provides evidence of the adverse effect of the European sovereign debt crisis and ensuing period of austerity on a scarcely explored aspect of health.

scholarly journals Should the West African countries form a currency union?

2014 ◽  
Vol 8 (3) ◽  
pp. 326-338
Author(s):  
TO Akinbobola ◽  
AE Akinlo
Keyword(s):  
Real Exchange Rates ◽  
Secondary Data ◽  
Output Growth ◽  
West African ◽  
Optimum Currency Area ◽  
African Countries ◽  
Vector Autoregressive ◽  
Currency Area ◽  
Exchange Rate Shocks ◽  
Optimum Currency

This paper examines whether or not the Economic Community of West African States (ECOWAS), comprising  fifteen countries, constitutes an Optimum Currency Area (OCA). The paper uses secondary data obtained from the International Financial Statistics Bulletin, covering the period 1986 to 2003. The Vector Autoregressive (VAR) modelling technique was used to investigate the optimality of the community as a currency area. The study found  that shocks to the output growth rate and inflation rates aligned symmetrically. Except for Nigeria and Sierra Leone, shocks to the real exchange rates also aligned symmetrically across countries. However, the degree of openness variable showed asymmetrical disturbance across countries. This paper thus concludes that  a low trade link exists among member countries of ECOWAS, traced principally to the fact that these countries’ exports were competitive rather than complementary. The asymmetric disturbance of real exchange rate shocks and the low degree of openness across the countries implied that the sub-region could not effectively form a successful Optimum Currency Area (OCA). Nevertheless, the sub-region exhibits some potential for forming an optimum currency area in the future. 

scholarly journals Learning about fiscal multipliers during the European sovereign debt crisis: evidence from a quasi-natural experiment

2020 ◽  
Vol 35 (101) ◽  
pp. 5-40
Author(s):  
Lucyna Górnicka ◽  
Christophe Kamps ◽  
Gerrit Koester ◽  
Nadine Leiner-Killinger
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Output Growth ◽  
Sovereign Debt Crisis ◽  
Data Set ◽  
Fiscal Multipliers ◽  
Ex Post ◽  
European Sovereign Debt Crisis ◽  
Alternative Scenarios ◽  
Excessive Deficit Procedure

SUMMARY Identifying fiscal multipliers, that is, the effect of discretionary fiscal actions on growth, is challenging. It requires comparing the realization of growth after a fiscal action to a hypothetical growth path that would have prevailed in the absence of such action. Deriving the hypothetical path usually involves very strong assumptions. This paper helps to relax some of the assumptions, using a unique new data set on the European Commission’s recommendations under the so-called excessive deficit procedure (EDP). These recommendations provide information on both output growth in a no-policy-change baseline forecast and an alternative forecast of growth incorporating the size of fiscal consolidation recommended under the EDP. A comparison of these two alternative scenarios allows us to infer country-specific fiscal multipliers implicitly applied by the Commission in its EDP recommendations for a sample of 24 countries over the period 2009–2015. Our results confirm Blanchard and Leigh’s (2013, 2014) presumption that fiscal multipliers used by forecasters were adjusted upwards during the European sovereign debt crisis, albeit starting from lower than commonly assumed levels. Contrary to Blanchard and Leigh (2013, 2014), we do not find evidence that the ‘true’ ex-post fiscal multipliers systematically exceeded 1 in the early crisis years.

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