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Estimated Stabilization Costs of the EMU

Published online by Cambridge University Press:  26 March 2020

Ray C. Fair
Ray C. Fair*
Affiliation:
Cowles Foundation, Yale University, New Haven, CT06520-8281
*
Voice: 203-432-3715; Fax: 203-432-6167; e-mail: fair@econ.yale.edu; website: http://fairmodel.econ.yale.edu
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Abstract

A multicountry econometric model and stochastic simulation are used to estimate the stabilization costs of the European Monetary Union (EMU). A measure of the variability of output and other variables is computed for the current regime and for the EMU regime. The results show that Germany is hurt the most in terms of increased output variability in moving from the current regime to the EMU regime.

Type
Articles
Information
National Institute Economic Review , Volume 164 , April 1998 , pp. 90 - 99
Copyright
Copyright © 1998 National Institute of Economic and Social Research

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Footnotes

A previous version of this paper was presented at an ESRC conference on Macroeconomic Modelling and Economic Policy, London, 8-9 January 1998. All the data used in this paper can be downloaded from the website. I am indebted to William Nordhaus for many useful suggestions.

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