Currency Unions, Economic Fluctuations and Adjustment: Some Empirical Evidence

37 Pages Posted: 8 Nov 2001

See all articles by Tamim Bayoumi

Tamim Bayoumi

International Monetary Fund (IMF); Centre for Economic Policy Research (CEPR)

Eswar S. Prasad

Cornell University - Dyson School of Applied Economics and Management; Cornell University - Department of Economics; Brookings Institution; NBER; IZA Institute of Labor Economics

Date Written: May 1995

Abstract

This paper compares sources of disturbances to output and labour market adjustment in the US currency union compared to a set of EU countries. Comparable datasets comprising 1-digit sectoral data for 8 US regions and 8 European countries are constructed and used to study the relative importance of industry-specific, region-specific, and aggregate shocks to output growth. Both areas are subject to similar overall disturbances although a disaggregated perspective reveals some differences. The major difference, however, is in labour market adjustment. Inter-regional labour mobility appears to be a much more important adjustment mechanism in the United States, which has a more integrated labour market than the EU.

Keywords: Currency unions, economic fluctuations, labour market adjustment

JEL Classification: E32, F33, J61

Suggested Citation

Bayoumi, Tamim and Prasad, Eswar S., Currency Unions, Economic Fluctuations and Adjustment: Some Empirical Evidence (May 1995). CEPR Discussion Paper No. 1172. Available at SSRN: https://ssrn.com/abstract=289486

Tamim Bayoumi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
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202-623-6333 (Phone)
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Centre for Economic Policy Research (CEPR)

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United Kingdom

Eswar S. Prasad

Cornell University - Dyson School of Applied Economics and Management ( email )

440 Warren Hall
Ithaca, NY 14853
United States

HOME PAGE: http://prasad.aem.cornell.edu

Cornell University - Department of Economics ( email )

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Brookings Institution ( email )

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NBER ( email )

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IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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