Growing too fast? Shock asymmetries and the Euro Area enlargement

Marilyne Huchet (1) , Jean-Sébastien Pentecôte (2)

1 SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires
2 CREM - Centre de recherche en économie et management

This study gives an empirical assessment of the EMU enlargement. Following Bayoumi and Eichengreen (1993), asymmetries are measured by correlations among the structural shocks from a VAR. We address two questions: what is the impact of new adhesions on the stability of the enlarged union? Is the measurement of asymmetries robust to identification of shocks? Using monthly data over 1995-2007, Slovenia and Greece stay at the periphery of the EMU like Estonia and Lithuania, despite their adhesion. While currency unions’ endogeneity is supported by the greater symmetry between responses to shocks, using long-run restrictions puts the overall assessment into question.

Mots clés: EURO AREA ENLARGEMENT; OPTIMAL CURRENCY AREA; SHOCK ASYMETRY; VAR IDENTIFICATION

Mots clés: europe

Domaines: Sciences du Vivant [q-bio]

Marilyne Huchet, Jean-Sébastien Pentecôte. Growing too fast? Shock asymmetries and the Euro Area enlargement. 24. Symposium on Money, Bank and Finance, Jun 2008, Rennes, France. ⟨hal-01462663⟩