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ASSESSING THE ENDOGENEITY OF OCA CONDITIONS IN EMU *
Author(s) -
VIEIRA CARLOS,
VIEIRA ISABEL
Publication year - 2012
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2012.02321.x
Subject(s) - endogeneity , economics , ex ante , currency , politics , estimation , panel data , macroeconomics , economic and monetary union , optimum currency area , european union , econometrics , monetary economics , international economics , political science , management , law
The academic and political discussion about which countries met the conditions for joining the Economic and Monetary Union was decisively influenced by the Frankel and Rose ( European Economic Review , Vol. 41, Nos 3–5, (1997) pp. 753–760) hypothesis concerning endogenous optimum currency areas (OCA) properties. The answer to their question ‘Is EMU more justifiable ex post than ex ante ?’ was a definite yes in their ex ante analysis. Our ex post examination of the euro's first decade suggests however that the hypothesis does not hold for some countries. This paper utilizes panel data estimation techniques to compute OCA indices that help assess the OCA endogeneity hypothesis and signal current external and fiscal imbalances.