Heterogeneity within the euro area: New insights into an old story

Virginie Coudert (), Cécile Couharde (), Carl Grekou and Valérie Mignon ()

Post-Print from HAL

Abstract: We assess cross-country heterogeneity within the eurozone and its evolution over time by measuring the distances between the equilibrium exchange rates' paths of member countries. These equilibrium paths are derived from the minimization of currency misalignments, by matching real exchange rates with their economic fundamentals. Using cluster and factor analyses, we identify two distinct groups of countries in the run-up to the European Monetary Union (EMU), Greece being clearly an outlier at that time. Comparing the results with more recent periods, we find evidence of rising dissimilarities between these two sets of countries, as well as within the groups themselves. Overall, our findings illustrate the building-up of macroeconomic imbalances within the eurozone before the 2008 crisis and the fragmentation between its member countries that followed.

Date: 2020
Note: View the original document on HAL open archive server: https://hal.science/hal-02385565
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published in Economic Modelling, 2020, 90, pp.428-444. ⟨10.1016/j.econmod.2019.11.028⟩

Downloads: (external link)
https://hal.science/hal-02385565/document (application/pdf)

Related works:
Journal Article: Heterogeneity within the euro area: New insights into an old story (2020)
Working Paper: Heterogeneity within the Euro Area: New Insights into an Old Story (2019)
Working Paper: Heterogeneity within the euro area: New insights into an old story (2019)
Working Paper: Heterogeneity within the euro area: New insights into an old story (2019)
Working Paper: Heterogeneity within the euro area: New insights into an old story (2019)
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:hal:journl:hal-02385565

DOI: 10.1016/j.econmod.2019.11.028

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().