Currency Unions, Economic Fluctuations, and Adjustment : Some New Empirical Evidence

Author/Editor:

Eswar S Prasad ; Tamim Bayoumi

Publication Date:

August 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the sources of disturbances to output in the United States and a set of EU countries and analyzes labor market adjustment mechanisms in these two economic areas. Comparable datasets comprising 1-digit sectoral data for eight U.S. regions and eight European countries are constructed and used to compare the degree of industrial diversification and the relative importance of different sources of shocks to output growth. Both areas are found to be subject to similar overall disturbances although a disaggregated perspective reveals some important differences. The major difference, however, is in labor market adjustment. Interregional labor mobility appears to be a much more important adjustment mechanism in the United States, which has a more integrated labor market than the EU.

Series:

Working Paper No. 96/81

Subject:

Notes:

Also published in Staff Papers, Vol. 44, No. 1, March 1997.

English

Publication Date:

August 1, 1996

ISBN/ISSN:

9781451955163/1018-5941

Stock No:

WPIEA0811996

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

28

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