Open AccessTHE MACROECONOMIC IMPACT OF THE EURO
Author(s) -
Veronika Akhmadieva,
Ron Smith
Publication year - 2019
Publication title -
scientific annals of economics and business
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.204
H-Index - 6
eISSN - 2501-3165
pISSN - 2501-1960
DOI - 10.47743/saeb-2019-0037
Subject(s) - economics , vector autoregression , equity (law) , currency , interest rate , inflation (cosmology) , structural vector autoregression , exchange rate , econometrics , counterfactual conditional , common currency , macroeconomics , monetary economics , monetary policy , counterfactual thinking , philosophy , physics , epistemology , theoretical physics , political science , law
This paper examines whether the establishment of the euro caused structural breaks in the main macroeconomic relationships of member countries. It compares eight original members of the common currency with four European countries that did not join. The analysis constructs counterfactuals using both single equation models and a six equation vector autoregression with foreign exogenous variables, VARX*, explaining output, inflation, equity prices, exchange rates and short and long interest rates. It considers which equations changed the most and the most likely dates for any structural break.