Has the Euro changed the business cycle?
In this paper we analyze European business cycles before and under EMU. Across the two periods we find 1) a significant decline in real exchange rate volatility, 2) significant changes in cross-country correlations, and 3) the volatility of macroeconomic fundamentals largely unchanged. We develop a...
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| Main Authors: | , , |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Bonn
Graduate School of Economics
June 2009
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| Series: | Bonn econ discussion papers
2009,06 |
| In: |
Bonn Econ Discussion Papers (2009,06)
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| Subjects: | |
| Online Access: | Verlag, Volltext: http://www.bgse.uni-bonn.de/bonn-econ-papers-1/archive/2009/zeno-enders-philip-jung-and-gernot-j.-muller-has-the-euro-changed-the-business-cycle-no.-6-2009 Download aus dem Internet, Stand 30.06.2009, Volltext: http://hdl.handle.net/10419/37040 
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| Author Notes: | by Zeno Enders, Philip Jung and Gernot J. Müller |
| Summary: | In this paper we analyze European business cycles before and under EMU. Across the two periods we find 1) a significant decline in real exchange rate volatility, 2) significant changes in cross-country correlations, and 3) the volatility of macroeconomic fundamentals largely unchanged. We develop a two-country business cycle model and show that the calibrated model is able to replicate key features of the data prior to and under EMU. We find that the euro has a strong bearing on the transmission mechanism as cross-country spillovers increase substantially under EMU. As a result, foreign shocks become more and domestic shocks less important in accounting for the (unchanged) volatility of macroeconomic fundamentals. -- European business cycles ; Euro ; Optimum Currency Area ; EMU ; Monetary Policy ; Exchange rate regime ; Cross-country spillovers |
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| Physical Description: | Online Resource |
| Format: | Systemvoraussetzungen: Acrobat Reader. |