Emu: Countries or Regions? Lessons from the EMS Experience

CEPR Discussion Paper Series No. 1558

Posted: 27 Mar 1997

See all articles by Antonio Fatás

Antonio Fatás

INSEAD; Centre for Economic Policy Research (CEPR); ABFER

Date Written: January 1997

Abstract

The future adoption of a single currency among some of the members of the European Union has raised many concerns about the ability of EMU to deal with shocks that are specific to regions or countries. The assumption behind these concerns is that national business cycles in Europe are fairly pronounced and that exchange rates are good stabilizing tools. This paper characterizes regional and national fluctuations within the European Union and studies how the process of integration and the creation of the EMS has affected these patterns. Our results indicate that national borders have seen their economic significance reduced over time as the process of integration has increased cross-border correlations and reduced within-border co-movements.

JEL Classification: E32, F33, F42

Suggested Citation

Fatas, Antonio, Emu: Countries or Regions? Lessons from the EMS Experience (January 1997). CEPR Discussion Paper Series No. 1558. Available at SSRN: https://ssrn.com/abstract=4772

Antonio Fatas (Contact Author)

INSEAD ( email )

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HOME PAGE: http://faculty.insead.edu/fatas

Centre for Economic Policy Research (CEPR)

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