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Regional and Sectoral Effects of a Common Monetary Policy: Evidence from Euro Referenda in Denmark and Sweden

Hamburg Contemporary Economic Discussion Paper No. 28

40 Pages Posted: 7 Feb 2010  

Gabriel M. Ahlfeldt

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Tobias Osterheider

Independent

Wolfgang Maennig

Universit├Ąt Hamburg, Faculty of Business, Economics and Social Sciences

Date Written: 2009

Abstract

This article provides empirical evidence for the (anticipated) net costs and benefits of a common monetary policy that varies across regions depending on the industry mix. The paper is the first to approach the issue of the regional and sectoral effects of a common monetary policy by using empirical spatial models to analyze referenda. Here, the referenda examined are the 2000 and 2003 referenda held in Denmark and Sweden regarding participation in the EMU. We find that voters in regions with a high proportion of interest-sensitive sectors and low international integration tend to oppose participation in a currency union. The opposite is true for non-interest-sensitive sectors with relatively high integration. These findings are in line with the hypothesis of rational voters maximizing utility. Furthermore, perceived net costs are found to increase with distance from the European core and with the age of voters, indicating that a national currency represents an experience good. These results are robust to spatial dependencies and are not driven by broader forms of Euro-skepticism.

Keywords: EMU, Euro, Regional & Sectoral Effects of Monetary Policy, Public Referenda, Denmark, Sweden

JEL Classification: E52, P16, R12

Suggested Citation

Ahlfeldt, Gabriel M. and Osterheider, Tobias and Maennig, Wolfgang, Regional and Sectoral Effects of a Common Monetary Policy: Evidence from Euro Referenda in Denmark and Sweden (2009). Hamburg Contemporary Economic Discussion Paper No. 28. Available at SSRN: https://ssrn.com/abstract=1544292 or http://dx.doi.org/10.2139/ssrn.1544292

Gabriel M. Ahlfeldt

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
WC2A 2AE London
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/ahlfeldg/

Tobias Osterheider

Independent ( email )

No Address Available

Wolfgang Maennig (Contact Author)

Universit├Ąt Hamburg, Faculty of Business, Economics and Social Sciences ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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