Costs of European Monetary Union: Evidence of monetary and fiscal policy effectiveness

Helene Schuberth () and Gert Wehinger

ERSA conference papers from European Regional Science Association

Abstract: Costs of a monetary union are typically analysed in the context of the optimum currency area approach, looking at the likelihood of asymmetric real disturbances, the degree of real wage flexibility and of labour mobility. But it is also important to consider the leeway of monetary and fiscal policy to respond to country-specific real shocks prior to entering the monetary union. Applying a structural VAR model to Austria, Belgium, the Netherlands, Sweden, Finland, France, Italy and the United Kingdom indicates that costs of giving up autonomous monetary policy in a European Monetary Union (EMU) would generally not be too high. Only in Italy and the United Kingdom autonomous monetary policy has shown positive short-run output effects in the past, in all other countries such effects are negligible or not significant. Some cushioning influence of adverse EMU effects, then, could be expected from autonomous fiscal policy measures, since results suggest that, with the exception of Finland and again Italy and the United Kingdom, autonomous fiscal policy had positive short-run output effects in the past in all cases, those effects being somewhat more pronounced in Belgium and Sweden.

Date: 1998-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www-sre.wu.ac.at/ersa/ersaconfs/ersa98/papers/459.pdf (application/pdf)

Related works:
Chapter: Costs of European Monetary Union: Evidence of Monetary and Fiscal Policy Effectiveness (1999)
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:wiw:wiwrsa:ersa98p459

Access Statistics for this paper

More papers in ERSA conference papers from European Regional Science Association Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by Gunther Maier ().