Specialisation in Europe and asymmetric shocks: potential risks of EMU

Most optimistic views, based on Optimum Currency Areas (OCA) literature, have concluded that the probability of asymmetric shocks to occur at a national level will tend to diminish in the Economic and Monetary Union (EMU)as a result of the intensification of the integration process during the most recent years. Therefore, since Economic Geography Theories predict a higher specialisation of regions, it is expected that asymmetric shocks will increase. Previous studies have examined to what extent asymmetric shocks have been relevant in the past using, mainly, static measures of asymmetries such as the correlation coefficients between series of shocks previously calculated from a structural VAR model (Bayoumi and Eichengreen, 1992). In this paper, we study the evolution of manufacturing specific asymmetries in Europe from a dynamic point of view (applying the model proposed by Haldane and Hall, 1991) in order to obtain new evidence about potential risks of EMU.- Els punts de vista més optimistes, basats en la literatura de les Àrees Monetàries Òptimes, arriben a la conclusió que la probabilitat d'ocurrència de shocks asimètrics en l'àmbit nacional tendiran a disminuir amb la Unió Econòmica i Monetària (UEM) donada la intensificació dels procés d'integració al llarg dels darrers anys. En canvi, les teories conegudes com noves teories de Geografia Econòmica prediuen un augment de l'especialització de les regions i, per tant, seria d'esperar que els shocks asimètrics augmentessin. La major part dels estudis previs s'han centrat en estudiar en quina mesura els shocks asimètrics han estat rellevants en el passat emprant, principalment, mesures d'asimetries estàtiques com ara coeficients de correlació entre sèries de shocks calculades prèviament a partir d¿un model VAR estructural (Bayoumi i Eichengreen, 1992) per tal de fer previsions cap al futur. En aquest paper estudiem l'evolució de les asimetries en la producció a Europa des d'un punt de vista dinàmic (aplicant el model proposat per Haldane i Hall, 1991) per a obtenir nova evidència sobre els riscos potencials de l'UEM

Preparations of the Visegrad Group Countries for Admission to the European Union: Monetary Policy Aspects

This study examines the path of adjustments of the exchange rate system in the transforming economy of Poland. It emphasizes the relative advantage of flexible exchange rates over the currency peg. It focuses on several aspects of the exchange rate policy that have not been adequately discussed. One of them is the rationale for returning to a currency peg to the leading currencies of the European Union (EU) and, in the future, to the Euro as a part of necessary preparations of the economy of Poland for accession to the Union. A return to a peg means the reversal from the path of the exchange rate system adjustments that has prevailed during the first five years, or in the first stage of the economic transformation. The study evaluates the rationale of applying a currency peg, thus “borrowing” monetary policy credibility from abroad, when the program of disinflation fails and the government loses a chance to stabilize the economy. High inflation that persists over a long time period is usually caused by automatic indexation, and adaptive expectations. Such chronic or inertial inflation continues long after the expiration of corrective inflation, or inflation stemming from price liberalization, cuts in subsidies and trade liberalization