Adjustment in EMU: Is Convergence Assured?

Arbeitspapier

Using a modified version of the model presented by Belke and Gros (2007), we analyze the stability of adjustment in a currency union. Using econometric estimates for parameter values we check the stability conditions for the 11 original EMU countries and Greece. We found significant instability in the model for a large number of countries. We then simulate the adjustment process for some empirically observed parameter values and find that even for countries with relatively smooth adjustment, the adjustment to a price shock in EMU might take several decades.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DEP (Socioeconomics) Discussion Papers - Macroeconomics and Finance Series ; No. 7/2009

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
• Subject: EMU ; convergence ; stability ; inflation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dullien, Sebastian ; Fritsche, Ulrich ; Groessl, Ingrid ; Paetz, Michael
• Event: Veröffentlichung
• (who): Hamburg University, Department Economics and Politics
• (where): Hamburg
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/103195
• Last update: 10.03.2025, 11:43 AM CET