Discussion paper

DP1172 Currency Unions, Economic Fluctuations and Adjustment: Some Empirical Evidence

This paper compares sources of disturbances to output and labour market adjustment in the US currency union compared to a set of EU countries. Comparable datasets comprising 1-digit sectoral data for 8 US regions and 8 European countries are constructed and used to study the relative importance of industry-specific, region-specific, and aggregate shocks to output growth. Both areas are subject to similar overall disturbances although a disaggregated perspective reveals some differences. The major difference, however, is in labour market adjustment. Inter-regional labour mobility appears to be a much more important adjustment mechanism in the United States, which has a more integrated labour market than the EU.

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Citation

Bayoumi, T and E Prasad (1995), ‘DP1172 Currency Unions, Economic Fluctuations and Adjustment: Some Empirical Evidence‘, CEPR Discussion Paper No. 1172. CEPR Press, Paris & London. https://cepr.org/publications/dp1172