The Transfer Problem in the Euro Area: A Cointegration Analysis

37 Pages Posted: 4 Nov 2005

See all articles by Alessandro Girardi

Alessandro Girardi

National Institute of Statistics (ISTAT)

Paolo Paesani

University of Rome - Tor Vergata - Department of Economics and Institutions

Date Written: November 2005

Abstract

This paper empirically investigates the Transfer problem for the "Euro area" vis a vis the Rest of the world. The empirical analysis is developed in a theoretically and statistically consistent way and is intended as a contribution to the literature on the macroeconomics of EMU. The paper reaches three conclusions. First, Net foreign asset accumulation in the Euro area is consistent with real exchange appreciation (Transfer effect). Second, the Transfer effect works essentially through the relative price of nontradables rather than through the terms of trade. Third, the transition from EMS to EMU has certainly had a statistically significant impact in terms of the Transfer effect. On the basis of currently available information, however, this appears to be of a transitory rather than permanent nature.

Keywords: tranfser problem, euro area, cointegration

JEL Classification: C32, C51, F21

Suggested Citation

Girardi, Alessandro and Paesani, Paolo, The Transfer Problem in the Euro Area: A Cointegration Analysis (November 2005). Available at SSRN: https://ssrn.com/abstract=835704 or http://dx.doi.org/10.2139/ssrn.835704

Alessandro Girardi (Contact Author)

National Institute of Statistics (ISTAT) ( email )

Via Cesare Balbo 16
00184 Rome, 0185
Italy

Paolo Paesani

University of Rome - Tor Vergata - Department of Economics and Institutions ( email )

Via Columbia n. 2
00133 Rome
Italy

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