On the impact of the launch of the euro on EMU macroeconomic vulnerability
No 2018-51, EconomiX Working Papers from University of Paris Nanterre, EconomiX
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: F32 F31 C33 (search for similar items in EconPapers)
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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