IDEAS home Printed from https://ideas.repec.org/p/zbw/bofrdp/rdp2015_011.html
   My bibliography  Save this paper

Are monetary unions more synchronous than non-monetary unions?

Author

Listed:
  • Crowley, Patrick M.
  • Trombley, Christopher

Abstract

Within currency unions, the conventional wisdom is that there should be a high degree of macroeconomic synchronicity between the constituent parts of the union. But this conjecture has never been formally tested by comparing sample of monetary unions with a control sample of countries that do not belong to a monetary union. In this paper we take euro area data, US State macro data, Canadian provincial data and Australian state data — namely real Gross Domestic Product (GDP) growth, the GDP deflator growth and unemployment rate data — and use techniques relating to recurrence plots to measure the degree of synchronicity in dynamics over time using a dissimilarity measure. The results show that for the most part monetary unions are more synchronous than non-monetary unions, but that this is not always the case and particularly in the case of real GDP growth. Furthermore, Australia is by far the most synchronous monetary union in our sample.

Suggested Citation

  • Crowley, Patrick M. & Trombley, Christopher, 2015. "Are monetary unions more synchronous than non-monetary unions?," Bank of Finland Research Discussion Papers 11/2015, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2015_011
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/212319/1/bof-rdp2015-011.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:zbw:bofrdp:2015_001 is not listed on IDEAS
    2. Seppo Honkapohja & Kaushik Mitra, 2015. "Comparing Inflation and Price-Level Targeting: The Role of Forward Guidance and Transparency," Manchester School, University of Manchester, vol. 83, pages 27-59, December.
    3. Hasan, Iftekhar & Massoud, Nadia & Saunders, Anthony & Song, Keke, 2015. "Which financial stocks did short sellers target in the subprime crisis?," Journal of Banking & Finance, Elsevier, vol. 54(C), pages 87-103.
    4. repec:zbw:bofrdp:urn:nbn:fi:bof-201504091146 is not listed on IDEAS
    5. repec:zbw:bofrdp:2015_006 is not listed on IDEAS
    6. repec:zbw:bofrdp:2015_007 is not listed on IDEAS
    7. repec:zbw:bofrdp:2015_004 is not listed on IDEAS
    8. repec:zbw:bofrdp:2015_009 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:bofrdp:2015_011 is not listed on IDEAS
    2. repec:zbw:bofrdp:2015_026 is not listed on IDEAS
    3. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    4. Eerola, Essi & Saarimaa, Tuukka, 2015. "Who Benefits from Public Housing?," Working Papers 68, VATT Institute for Economic Research.
    5. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    6. Eerola, Essi & Saarimaa, Tuukka, 2015. "Who Benefits from Public Housing?," Working Papers 68, VATT Institute for Economic Research.
    7. repec:zbw:bofrdp:urn:nbn:fi:bof-201512171488 is not listed on IDEAS
    8. repec:zbw:bofrdp:urn:nbn:fi:bof-201512101465 is not listed on IDEAS
    9. repec:zbw:bofrdp:urn:nbn:fi:bof-201508041349 is not listed on IDEAS
    10. repec:bof:bofrdp:urn:nbn:fi:bof-201512101465 is not listed on IDEAS
    11. repec:bof:bofrdp:urn:nbn:fi:bof-201508041349 is not listed on IDEAS
    12. repec:zbw:bofrdp:2015_030 is not listed on IDEAS
    13. repec:bof:bofrdp:urn:nbn:fi:bof-201512171488 is not listed on IDEAS
    14. Crowley, Patrick M. & Trombley, Christopher, 2015. "Are monetary unions more synchronous than non-monetary unions?," Research Discussion Papers 11/2015, Bank of Finland.
    15. Honkapohja, Seppo & Mitra, Kaushik, 2020. "Price level targeting with evolving credibility," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 88-103.
    16. repec:zbw:bofrdp:2015_022 is not listed on IDEAS
    17. Cole, Stephen J., 2020. "The influence of learning and price-level targeting on central bank forward guidance," Journal of Macroeconomics, Elsevier, vol. 65(C).
    18. Goy, Gavin & Hommes, Cars & Mavromatis, Kostas, 2022. "Forward guidance and the role of central bank credibility under heterogeneous beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1240-1274.
    19. André Marine Charlotte & Dai Meixing, 2018. "Learning, robust monetary policy and the merit of precaution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(2), pages 1-20, June.
    20. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    21. Lin, Chih-Yung & Bui, Dien Giau & Lin, Tse-Chun, 2020. "Do short sellers exploit risky business models of banks? Evidence from two banking crises," Journal of Financial Stability, Elsevier, vol. 46(C).
    22. repec:zbw:bofrdp:urn:nbn:fi:bof-201511261452 is not listed on IDEAS
    23. Chen, Shenglan & Chou, Robin K. & Liu, Xiaoling & Wu, Yuhui, 2020. "Deregulation of short-selling constraints and cost of bank loans: Evidence from a quasi-natural experiment," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    24. repec:zbw:bofrdp:urn:nbn:fi:bof-201511251450 is not listed on IDEAS
    25. repec:bof:bofrdp:urn:nbn:fi:bof-201511251450 is not listed on IDEAS
    26. Salle, Isabelle L., 2023. "What to target? Insights from a lab experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 514-533.
    27. Gavin Goy & Cars Homme & Kostas Mavromatis, 2018. "Forward Guidance and the Role of Central Bank Credibility," DNB Working Papers 614, Netherlands Central Bank, Research Department.
    28. Mariotto, Carlotta & Verdier, Marianne, 2015. "Innovation and competition in Internet and mobile banking: an industrial organization perspective," Research Discussion Papers 23/2015, Bank of Finland.
    29. repec:bof:bofrdp:urn:nbn:fi:bof-201511261452 is not listed on IDEAS
    30. Po‐Hsin Ho & Chih‐Yung Lin & Tse‐Chun Lin, 2022. "Equity Short Selling and the Bank Loan Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(2-3), pages 349-379, March.
    31. Boni, Leslie & Leach, J. Chris & White, Reilly S., 2021. "Crisis and non-crisis short selling and bank enforcement actions," Journal of Banking & Finance, Elsevier, vol. 132(C).
    32. Bui, Dien Giau & Lin, Chih-Yung & Chris, Vaike, 2019. "Short sellers and the failures of financial intermediaries," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    33. Cole, Stephen J., 2018. "The effectiveness of central bank forward guidance under inflation and price-level targeting," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 146-161.
    34. repec:zbw:bofrdp:2015_028 is not listed on IDEAS
    35. Dagmar Linnertová, 2016. "Testing of Short Sale Hypotheses on the U.S. Market in the Period from 1990 to 2015," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 2025-2038.

    More about this item

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bofrdp:rdp2015_011. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/bofgvfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.