Adopting the Euro: a synthetic control approach

Ricardo Duque Gabriel and Ana Sofia Pessoa

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate whether joining the European Monetary Union and losing the ability to set monetary policy affected the economic growth of 12 Eurozone countries. We use the synthetic control approach to create a counterfactual scenario for how each Eurozone country would have evolved without adopting the Euro. We let this matching algorithm determine which combination of other developed economies best resembles the pre-Euro path of twelve Eurozone economies. Our estimates suggest that there were some mild losers (France, Germany, Italy, and Portugal) and a clear winner (Ireland). Nevertheless, a GDP decomposition analysis suggests that the drivers of the economic gains and losses are heterogeneous.

Keywords: Monetary union; Eurozone; Macroeconomic performance; Synthetic control method; GDP decomposition (search for similar items in EconPapers)
JEL-codes: C32 E02 E30 E60 E65 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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https://mpra.ub.uni-muenchen.de/99391/1/MPRA_paper_99391.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/99622/1/MPRA_paper_99622.pdf revised version (application/pdf)

Related works:
Journal Article: Adopting the euro: A synthetic control approach (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99391

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