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Relative Prices and Economic Adjustment in the US and EU: A Real Story About European Monetary Union

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  • Bayoumi, Tamim
  • Thomas, Alun

Abstract

Structural vector autoregressions are used to analyse the relationship between real output and relative prices within the European Union (EU) and the United States. Relative price variability appears to be more important for adjustment within the EU than the United States, reflecting the lower integration of goods and factor markets. In the absence of higher market integration, the lower relative price variability implied by the introduction of a single currency in the EU could well cause significant economic disruption.

Suggested Citation

  • Bayoumi, Tamim & Thomas, Alun, 1994. "Relative Prices and Economic Adjustment in the US and EU: A Real Story About European Monetary Union," CEPR Discussion Papers 988, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:988
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    Cited by:

    1. Patrick-Hervé Mbouombouo Mfossa, 2015. "GOUVERNANCE ECONOMIQUE ET STABILISATION DES CHOCS ASYMETRIQUES: Quel mécanisme pour une meilleure viabilité de la CEMAC ?," Working Papers hal-01213989, HAL.
    2. Jean Pisani-Ferry, 1994. "Union monétaire et convergence : qu'avons nous appris ?," Working Papers 1994-14, CEPII research center.
    3. Schor, Armand-Denis, 2000. "La théorie des zones monétaires optimales : l’optimum, le praticable, le crédible et le réel," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 545-576, décembre.

    More about this item

    Keywords

    Common Currency; EMU; Relative Prices;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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