TY  - JOUR
AU  - Bayoumi,Tamim
AU  - Eichengreen,Barry
TI  - Shocking Aspects of European Monetary Unification
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3949
PY  - 1992
Y2  - January 1992
UR  - http://www.nber.org/papers/w3949
L1  - http://www.nber.org/papers/w3949.pdf
N1  - Author contact info:
Tamim Bayoumi
International Monetary Fund
700 19th Street NW
Washington, DC 20431
E-Mail: tbayoumi@imf.org

Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
M2  - featured in NBER digest on 1992-06-01
AB  - Data on output and prices for 11 EC member nations are analyzed to extract information on underlying aggregate supply and demand disturbances using a VAR decomposition. The coherence of the underlying shocks across countries and the speed of adjustment to these shocks are then compared to the results from US regional data. We find that the underlying shocks are significantly more idiosyncratic across EC countries than across US regions, which may indicate that the EC will find it more difficult to operate a monetary union. However a core of EC countries, made up of Germany and her immediate neighbors, experience shocks of similar magnitude and cohesion as the US regions. EC countries also exhibit a slower response to aggregate shocks than US regions, presumably reflecting lower factor mobility.
ER  -