On the impact of the launch of the euro on EMU macroeconomic vulnerability

Florian Morvillier ()

No 2018-51, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This paper aims at investigating the role played by the euro’s inception on external imbalances and macroeconomic vulnerability of the eurozone. To this end, we estimate a panel VAR model over the pre-euro (1980-1998) and EMU (1999-2016) periods for eleven eurozone members. Our findings show that with the adoption of the single currency, current account vulnerability to demand and currency misalignments shocks increases significantly. The correction of external imbalances within the euro area also becomes more difficult because of the disparition of a slow-growth process and devaluations as adjustment tools.

Keywords: Global imbalances; current account; output gap; exchange-rate misalignments; panel VAR. (search for similar items in EconPapers)
JEL-codes: C33 F31 F32 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2018
New Economics Papers: this item is included in nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2018-51

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