The Impact of the Key Structural Shifts on Euro Area's Endogeneity Formation

Kim Wi-Dae ()
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Kim Wi-Dae: Korea Center for International Finance, Seoul, Republic of Korea, Postal: Ph.D. from Korea University, Seoul, South Korea, currently working for Korea Center for International Finance (KCIF), Seoul.

Journal of Economic Integration, 2025, vol. 40, issue 2, 275-290

Abstract: This article tests the change in OCA (Optimal Currency Area) endogeneity, respectively before and after the Euro launch and Fiscal crisis, to assess how much improvement has been achieved after those structural shifts. Improving upon the existing literature, the test methodology presented here proffers a new standardized tool. The launch of the euro has generally improved endogeneity more compared to the fiscal crisis; but, especially in the southern European countries, the result was quite the opposite. Germany and France showed relatively low endogeneity improvement after both the periods, which might contribute to the severe economic slowdown these leader countries have experienced after the Covid era. These results support that a significant delay in endogenous improvements could weaken the region's competitiveness and undermine the depth of economic integration in the euro area.

Keywords: Euro; OCA; Endogeneity; Fiscal crisis; Convergence (search for similar items in EconPapers)
JEL-codes: C01 E44 F15 F45 J30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0944

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