Abstract
In this paper we introduce a new definition for an optimum currency area (OCA) which is more restrictive than the previous ones. Indeed, using both a cointegration and a common cyclical feature analysis in a VAR (p) framework, a set of countries is said to constitute a perfect OCA if the short-run dynamics is perfectly correlated while long-run relationships are not constrained. Using seasonally unadjusted industrial production indices for the period 75:M1 to 97:M4, we show that European countries are not sufficiently related to fit our definition.
Original language | English |
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Article number | 276993 |
Pages (from-to) | 115-132 |
Number of pages | 18 |
Journal | Empirica |
Volume | 27 |
Issue number | 2 |
DOIs | |
Publication status | Published - 2000 |
Keywords
- Common cycles
- European monetary integration
- Optimum currency area