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Area Economy (area + economy)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting85%

Kinds of Area Economy

  • euro area economy
    		•

    Selected Abstracts

    Do EMU Members Share the Same Business Cycle?,

    JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 5 2004
    CARLO ALTAVILLA
    The article analyses alternative approaches for dating the business cycles of a set of European monetary union (EMU) member states. First, the framework for analysing cyclical behaviour in economic activity is presented. Second, the dating algorithm is applied to both the classical cycle and the growth cycle in order to recover stylized facts of the business cycle in Europe. Third, the article utilizes different econometric techniques to evaluate the synchronicity of national cycles and the euro area aggregate cycle, and compare the results with that of the USA. A convergence analysis is also employed. Finally, a multivariate extension of the Hamilton-Markov switching model is constructed to analyse the euro area business cycle. The results suggest that, although during the main recessionary periods the euro area economies shared a similar output dynamic, some differences still remain in the size and timing of the business cycle features. The results also suggest that adhesion to the new currency area is likely to lead to stronger synchronization of EMU members' business cycles. [source]

    MACROECONOMETRIC MODELLING WITH A GLOBAL PERSPECTIVE,

    THE MANCHESTER SCHOOL, Issue 2006
    M. HASHEM PESARAN
    This paper provides a synthesis and further development of a global modelling approach introduced in Pesaran et al. (Journal of Business and Economic Statistics, Vol. 22 (2004), pp. 129,162), where country-specific models in the form of VARX* structures are estimated relating a vector of domestic variables, xit, to their foreign counterparts, , and then consistently combined to form a global vector autoregression. It is shown that the VARX* models can be derived as the solution to a dynamic stochastic general equilibrium model where overidentifying long-run theoretical relations can be tested and imposed if acceptable. This gives the system a transparent long-run theoretical structure. Similarly, short-run overidentifying theoretical restrictions can be tested and imposed if accepted. Alternatively, if one has less confidence in the short-run theory the dynamics can be left unrestricted. The assumption of the weak exogeneity of the foreign variables for the long-run parameters can be tested, where variables can be interpreted as proxies for regional and global factors. Rather than using deviations from ad hoc statistical trends, the equilibrium values of the variables reflecting the long-run theory embodied in the model can be calculated. The paper also provides some new results on the relative importance of external shocks for the UK and the Euro area economies. [source]

    Oil and the Euro area economy

    ECONOMIC POLICY, Issue 60 2009
    Gert Peersman
    Summary We examine the macroeconomic effects of different types of oil shocks and the oil transmission mechanism in the Euro area. A comparison is made with the US and across individual member countries. First, we find that the underlying source of the oil price shift is crucial to determine the repercussions on the economy and the appropriate monetary policy reaction. Second, the transmission mechanism is considerably different compared to the US. In particular, inflationary effects in the US are mainly driven by a strong direct pass-through of rising energy prices and indirect effects of higher production costs. In contrast, Euro area inflation reacts sluggishly and is much more driven by second-round effects of increasing wages. The monetary policy reaction of the ECB to oil shocks is also strikingly different compared to the FED. The inflation objective, relative to the output stabilization objective, appears more important for Euro area monetary authorities than for the FED. Third, there are substantial asymmetries across member countries. These differences are due to different labour market dynamics which are further aggravated by a common monetary policy stance which does not fit all. --- Gert Peersman and Ine Van Robays [source]

    A Speed Limit Monetary Policy Rule for the Euro Area,

    INTERNATIONAL FINANCE, Issue 1 2007
    Livio StraccaArticle first published online: 5 APR 200
    The main task of central banks is to set the level of short-term nominal interest rates in reaction to economic developments, with the aim of achieving their statutory objectives (typically some combination of inflation and output variability). If agents are forward-looking, central banks can achieve better macroeconomic outcomes by committing to follow a rule-like behaviour. Against this background, the contribution of this paper is twofold. First, it estimates a small-scale model of the euro area economy that can be used as a benchmark for the evaluation of different simple policy rules in the euro area economy. Second, it studies the performance of a relatively new type of rule, labelled ,speed limit' (SL), where the nominal interest rate reacts to the rate of growth in the output gap. The main conclusion of the study is that an SL policy performs remarkably well. [source]

    Exploring the international linkages of the euro area: a global VAR analysis

    JOURNAL OF APPLIED ECONOMETRICS, Issue 1 2007
    Stephane Dees
    This paper presents a quarterly global model combining individual country vector error-correcting models in which the domestic variables are related to the country-specific foreign variables. The global VAR (GVAR) model is estimated for 26 countries, the euro area being treated as a single economy, over the period 1979,2003. It advances research in this area in a number of directions. In particular, it provides a theoretical framework where the GVAR is derived as an approximation to a global unobserved common factor model. Using average pair-wise cross-section error correlations, the GVAR approach is shown to be quite effective in dealing with the common factor interdependencies and international co-movements of business cycles. It develops a sieve bootstrap procedure for simulation of the GVAR as a whole, which is then used in testing the structural stability of the parameters, and for establishing bootstrap confidence bounds for the impulse responses. Finally, in addition to generalized impulse responses, the current paper considers the use of the GVAR for ,structural' impulse response analysis with focus on external shocks for the euro area economy, particularly in response to shocks to the US. Copyright © 2007 John Wiley & Sons, Ltd. [source]

    ESTIMATED DYNAMIC STOCHASTIC GENERAL EQUILIBRIUM MODEL OF THE TAIWANESE ECONOMY

    PACIFIC ECONOMIC REVIEW, Issue 2 2009
    Wing Leong Teo
    Several versions of the model with different representations of Taiwanese monetary policy are estimated using Bayesian techniques. The major findings are that: (i) monetary policy in Taiwan is best described by a money supply growth rate rule; (ii) the Taiwanese economy is more flexible than the Euro area economy; and (iii) export price mark-up and investment-specific technology shocks are the main driving forces of output growth fluctuations in Taiwan. [source]

    European Monetary Union: the dark sides of a major success

    ECONOMIC POLICY, Issue 46 2006
    Charles Wyplosz
    SUMMARY European monetary union THE DARK SIDES OF A MAJOR SUCCESS This paper revisits the debates that have surrounded the launch of a unique experience: the adoption of a common currency among developed countries. A striking aspect of this history is that, pressed by what they correctly identified as a window of opportunity, policy-makers crafted this complex project in a short period of time, largely eschewing inputs from the academic profession. Academic research, in turn, developed its own views, which turned out to be critical of some ley orientations, yet it generally recognizes that, in the end, the launch of the euro has been a major success. Over time, many of the academic criticisms have been taken on board, but not yet fully. The monetary strategy has been slightly amended, but it remains the subject of disagreements between the European Central Bank and monetary economists. Events have confirmed that the Stability and Growth Pact was ill-designed; its reformulation goes some way to address some of the concerns but not all of them. Its ability to deliver fiscal discipline is in doubt. Another look at the experiment highlights the gap between the principles laid out by those who designed the monetary union and the pragmatism that has prevailed thereafter. The resulting tension between principles and actions sometimes obscures the fact that the Eurosystem has acted wisely so far. The widespread perception that monetary policy is not as transparent as it should be and suffers from a lack of adequate democratic accountability is not just annoying. The general public, including politicians, sometimes blames the Eurosystem for Europe's poor growth performance since the adoption of the euro. This is unfair and could dangerously undermine the monetary union if the Eurosystem were to become the scapegoat for the slow and incomplete reforms that are needed to revigorate the euro area's economies. , Charles Wyplosz [source]