Optimum currency areas and European monetary unification

Selahattin Dibooglu, Julius Horvath

Research output: Contribution to journalArticlepeer-review

Abstract (may include machine translation)

This paper examines the European experience from optimum currency areas perspective with a focus on the correlation of underlying aggregate shocks within a structural vector autoregression (VAR) framework. Appropriately identifying supply shocks, real fiscal shocks, and nominal shocks, the paper investigates the correlations of shocks and tries to evaluate the likely adjustment and other problems that may take place with the introduction of a single currency in Europe. Using data for 20 European market economies, the paper compares original members of the European Community to new members and non-members. Shocks are mostly country-specific, particularly for newer members and non-members, suggesting the importance of alternative adjustment mechanisms other than national monetary policies after the introduction of a single currency.

Original languageEnglish
Pages (from-to)37-49
Number of pages13
JournalContemporary Economic Policy
Volume15
Issue number1
DOIs
StatePublished - 1997
Externally publishedYes

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