Structural changes and deviations from the PPP within the Euro Area

Daniele Antonucci and Alessandro Girardi
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Daniele Antonucci: CSC - Centro Studi Confindustria

No 57, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: This paper focuses on macroeconomic interdependencies among the euro area member countries over the period 1984-2002. The theoretical framework builds on the generalized purchasing power parity hypothesis, which is empirically tested using vector error correction models with broken deterministic components. The euro area turns out to be an integrated entity, even if national economies still exhibit a certain degree of heterogeneity. The results also suggest that up to now the “euro-effect” in fostering integration within the euro area has been quite weak.

Keywords: Euro area; purchasing power parity; cointegration; structural breaks (search for similar items in EconPapers)
JEL-codes: C32 E31 F36 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-09
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:isa:wpaper:57

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