Identifier: TFG:2755
Authors: Favre de Noguera, Daniel
Abstract:
The theory of Optimal Currency Areas tries to determine how large should the appropriate extension be for a set of territorial regions included under the same common currency. The debate focuses on a dilemma that sets the benefits of such unification against the associated costs, mainly losing the autonomy of monetary policy. To shed light on this debate, in 1993, Bayoumi and Eichengreen published an article using Structural VAR models to measure demand and supply shocks in an economy. Knowing these shocks and comparing them between different countries allows us to determine the degree of business cycle synchronization among them. Whenever this synchronization is high, we believe that both territories could favour the same monetary policies and, therefore benefit from sharing a common currency. Among other many results, Bayoumi and Eichengreen found, for the case of Europe, a core-periphery trend between the north-central countries of Europe and those around them. In 2016, Campos and Macchiarelli, reviewed the article by Bayoumi and Eichengreen with the corresponding temporary update and more specifically for the case of Europe in order to study how the European Monetary Union has affected the results of those authors. The goal of this Bachelor thesis is to update the studies mentioned above with new data and verify the validity of the aforementioned results. As the main conclusion, we find that the EMU has contributed to weaken the core-periphery pattern stablished in Europe and that those countries that have adopted the Euro have begin a convergence as far as business cycle synchronization is concerned.
Repositori URV