Markets Integration and Macroeconomic. Dispersion in a Monetary Union

Aurélien Eyquem and Jean-Christophe Poutineau ()

Recherches économiques de Louvain, 2010, vol. 76, issue 1, 5-30

Abstract: Using a two?country DGSE combining nominal rigidities and financial frictions, we show that the persistence of output and inflation asymmetries observed since 1999 in an increasingly integrated EMU is not necessarily puzzling. Only the integration of intermediate goods markets unambiguously leads to a reduction of asymmetries while the integration of finals goods markets and the integration of financial markets increase the dispersion of inflation rates and business cycles. The result builds on the intensive use of financial markets, i.e. the current account, to adjust externally and smooth the consequences of asymmetric shocks. This mechanism implies a disconnection of country?level outputs and/or inflation rates to ensure that agents return to their initial asset position in the long run. JEL Classification : E32 ; F32 ; F41.

Keywords: Monetary union; markets integration; trade openness; inflation dispersion; output dispersion (search for similar items in EconPapers)
JEL-codes: F41 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.cairn.info/load_pdf.php?ID_ARTICLE=REL_761_0005 (application/pdf)
http://www.cairn.info/revue-recherches-economiques-de-louvain-2010-1-page-5.htm (text/html)
free

Related works:
Working Paper: Markets Integration and Macroeconomic Dispersion in a Monetary Union (2010)
Working Paper: Markets integration and macroeconomic dispersion in a monetary union (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cai:reldbu:rel_761_0005

Access Statistics for this article

More articles in Recherches économiques de Louvain from De Boeck Université
Bibliographic data for series maintained by Jean-Baptiste de Vathaire ().