EMU Membership and Business Cycle Phases in Europe: Markov-Switching VAR Analysis

Beine, Michel; Candelon, Bertrand; Sekkat, Khalid

doi:10.11130/jei.2003.18.1.214

Cited by 19 publications

(6 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This was already the case for the former EU-15 which is covered e.g. by the studies of Eichengreen (1990), Neumann von Hagen (1991), De Grauwe Vanhaverbeke (1993), Bayoumi Eichengreen (1993) and Beine et al (2003). The same result also holds for the EU-25 (see Korhonen Fidrmuc, 2001).…”

Section: Theoretical and Empirical Argumentssupporting

confidence: 59%

The Eurozone: Piecemeal Approach to an Optimum Currency Area

Handler

2013

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractSoon after the establishment of the Eurozone it became obvious that the structural differences between member countries would not abate, as expected, but rather gradually widen. Although part of the problem can be attributed to the enlargement process, it also relates to asymmetric effects of the common currency and to diverging economic policies. This paper discusses the literature which associates the economic characteristics of EMU with arguments of the optimum currency area (OCA) theory and asks for missing capstones that would meliorate EMU to eventually resemble an OCA. As potential candidates for such building blocks, some sort of fiscal union and lender of last resort may qualify, drawing on the experiences of other currency unions and federal states. The financial and debt crisis has revealed that the endogenous forces within a currency union may be too slow to absorb the shocks originating from the crisis. For a currency union to survive in such a situation it is all the more important that the OCA criteria are met and/or that complementary institutions are in place. However, as actual developments in the Eurozone reveal, the political process of approaching an OCA is piecemeal rather than comprehensive and prompt. AbstractSoon after the establishment of the Eurozone it became obvious that the structural differences between member states would not abate, as expected, but rather gradually widen. Although part of the problem can be attributed to the enlargement process, it also relates to asymmetric effects of the common currency and to diverging economic policies. This paper discusses the literature which associates the economic characteristics of EMU with arguments of the optimum currency area (OCA) theory and asks for missing capstones that would meliorate EMU to eventually resemble an OCA. As potential candidates for such building blocks, some sort of fiscal union and lender of last resort may qualify, drawing on the experiences of other currency unions and federal states. The financial and debt crisis has revealed that the endogenous forces within a currency union may be too slow to absorb the shocks originating from the crisis. For a currency union to survive in such a situation it is all the more important that the OCA criteria are met and/or that complementary institutions are in place. However, as actual developments in the Eurozone reveal, the political process of approaching an OCA is piecemeal rathe...

show abstract

Section: Theoretical and Empirical Argumentssupporting

confidence: 59%

The Eurozone: Piecemeal Approach to an Optimum Currency Area

Handler

2013

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…Valle e Azevedo (2002) with almost similar approach concluded that in fact there exists a high correlation of in-phase cyclical movements. Beine et al (2003) analyzed unemployment with probabilities from a Markov switching VAR model (several indicators similar to concordance indices) and noticed more synchronization amongst EMU members compared to European Periphery. Garnier (2003) analysis based on various characteristics including concordance index of classical cycle determined with BB procedure suggested that core group of euro countries show increased similarity with German cycle.…”

Section: Business Cycles Synchronization and Growth Perspectivesmentioning

confidence: 99%

Business Cycle – Growth Nexus: A Review

Škare

Tomić

2015

Technological and Economic Development of Economy

View full text Add to dashboard Cite

Frequent reversals in business cycles pose the question whether country can achieve macroeconomic stability and/or economic growth by coordinating its economic policies. Thus, what is the role of economic policy within the short/long run in amplifying or dampening shocks? Business cycle -economic growth relationship is rather ambiguous and has, thus, attracted controversy. In this sense the (dis)belief that there indeed exists a relationship between the economic growth and business cycle, and their long-run convergence brings us to three important hypotheses that: (1) the evaluation of cycle-growth bond is inconclusive, (2) empirical testing of cycle synchronization is exaggerated and (3) the hypothesis of coupling/decoupling is ambiguous and can be misleading. Economic growth is a complex process and cannot be attributed to a single factor of observance hence this essay is just a tool of theoretical reasoning with firm grip on empirical circumstances that lead us to consider some issues that dwell the "growth economists" these days. Our study suggests a conclusion that discussions on the cycle-growth nexus are far from over, revealing us some remarkable confrontations within empirical domain.

show abstract

“…Some subset of countries could be said to satisfy these conditions, but the Eurozone as a whole probably could not. This general conclusion was buttressed by a large empirical literature (see Bayoumi & Eichengreen 1997, Bayoumi et al 1995, Beine et al 2003, Eichengreen 1990, De Grauwe & Vanhaverbeke 1993, Erkel-Rousse & Mélitz 1995, and De Grauwe 2012 for a survey). As I will show, the occurrence of asymmetric shocks and the lack of sufficient wage and price flexibility would play a major role in the development of the Euro-crisis at the end of the 2000-2010 decade.…”

Section: The Influence Of the Oca Theorymentioning

confidence: 99%

The Political Economy of the Euro

Grauwe

2013

Annu. Rev. Polit. Sci.

View full text Add to dashboard Cite

The Eurozone's present state of crisis originated from decisions made at its creation. The decision to create a monetary union was motivated by political objectives and completely disregarded the economics of a monetary union. Political leaders did not understand the necessary economic conditions for a successful monetary union and did not recognize the inherent fragility of the monetary union they established. They showed the same disturbing lack of understanding of the economics of the sovereign debt crisis in 2010. They misdiagnosed the problem, and their response included disastrous decisions that intensified the crisis. This review explains these errors and concludes with recommendations for saving the euro.

show abstract

EMU Membership and Business Cycle Phases in Europe: Markov-Switching VAR Analysis

Cited by 19 publications

References 22 publications

The Eurozone: Piecemeal Approach to an Optimum Currency Area

The Eurozone: Piecemeal Approach to an Optimum Currency Area

Business Cycle – Growth Nexus: A Review

The Political Economy of the Euro

Contact Info

Product

Resources

About