The endogeneity of optimum currency area criteria, intraindustry trade and EMU enlargement

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Title: The endogeneity of optimum currency area criteria, intraindustry trade and EMU enlargement
Author: Fidrmuc, Jarko
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 8/2001
Year of publication: 2001
Publication date: 10.4.2001
Published in: Published in Contemporary Economic Policy vol. 22, no 1 (2004), pp. 1-12
Pages: 29 s.
Keywords: ulkomaankauppa; suhdanteet; valuuttaunionit; EMU; KIE; Itä-Eurooppa; integraatio; Bofit-kokoelma; optimaalinen valuutta-alue
Abstract: This paper tests an endogeneity hypothesis of optimum currency area (OCA) criteria (Frankel and Rose, 1998) on a cross-section of OECD countries between 1990 and 1999.The findings indicate that convergence of business cycles relates to intra-industry trade, but has no direct relation between business cycles and bilateral trade intensity.As far as intra-industry trade is positively correlated with trade intensities, this result confirms the OCA endogeneity hypothesis.The endogeneity of OCA linkage criteria implies extensive business cycle harmonization between CEECs and EU countries in the medium term.
Rights: https://helda.helsinki.fi/bof/copyright


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