F42 International Policy Coordination and Transmission

Economic sentiment shocks and fluctuations in economic activity in the Euro Area

JEL code(s)	C22 Single Equation Models; Single Variables: Time-Series Models C32 Multiple or Simultaneous Equation Models: Time-Series Models E32 Business Fluctuations; Cycles E66 General Outlook and Conditions F42 International Policy Coordination and Transmission
Keywords	business cycle measurement, economic sentiment indicator, Euro area, survey data
Authors:	Bas Van Aarle
Date published:	April 8, 2011
Paper:	Download the paper [364.64 KB]

JEL code(s)	E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems F36 Financial Aspects of Economic Integration F42 International Policy Coordination and Transmission
Keywords	Central and Eastern Europe, currency union, echange rate variability, euroization, job creation
Series Number:	EABCN/CEPR Discussion Paper 12/2004
Authors:	Ansgar Belke Leo Kaas Ralph Setzer
Date published:	December 1, 2004
Abstract:	According to the traditional 'optimum currency area' approach, the case for adopting a common currency is stronger if the countries are subject to relatively similar output shocks. This Paper takes a different approach and highlights the fact that high exchange rate volatility may as well signal high costs for labour markets. The impact of exchange rate volatility on labour markets in the CEECs is analysed, finding that volatility vis-à-vis the euro significantly lowers employment growth and raises the unemployment rate. Hence, the elimination of exchange rate volatility can be considered equally important for labour markets as a removal of employment protection legislation.
Paper:	Download the paper [332.34 KB]