Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103195
Authors: 
Dullien, Sebastian
Fritsche, Ulrich
Groessl, Ingrid
Paetz, Michael
Year of Publication: 
2009
Series/Report no.: 
DEP (Socioeconomics) Discussion Papers, Macroeconomics and Finance Series 7/2009
Abstract: 
Using a modified version of the model presented by Belke and Gros (2007), we analyze the stability of adjustment in a currency union. Using econometric estimates for parameter values we check the stability conditions for the 11 original EMU countries and Greece. We found significant instability in the model for a large number of countries. We then simulate the adjustment process for some empirically observed parameter values and find that even for countries with relatively smooth adjustment, the adjustment to a price shock in EMU might take several decades.
Subjects: 
EMU
convergence
stability
inflation
JEL: 
E32
E61
C32
Document Type: 
Working Paper

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