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Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

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1804-1663
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Volume 15, Issue 2 (Jun 2015)

Issues

An Evaluation of Selected Economic Areas according to Similarity of Supply and Demand Shocks

Stanislav Kappel
  • Corresponding author
  • VŠB – Technical University of Ostrava, Department of Economic Policy, Faculty of Economy, Sokolská třída 33, 701 21 Ostrava, Czech Republic
  • Email:
Published Online: 2015-07-16 | DOI: https://doi.org/10.1515/revecp-2015-0018

Abstract

The Euro Area remains a well-known monetary union in the World. But the possibilities of creation of new monetary unions are discussed. It is spoken about NAFTA (Canada, Mexico and the United States) or MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and Venezuela). The aim of this paper is to assess the similarity of demand and supply shocks in the countries of NAFTA and MERCOSUR, and to compare it with the countries of the Euro Area. For these aims, correlation and structural vector autoregression methods are used. Methods are based on Blanchard and Quah (1989) and Bayoumi and Eichengreen (1993). We confirm the existence of core states and periphery states in the Euro Area with some exceptions. If we compare supply and demand shocks, we find more similarity in the case of supply shocks in the countries of the Euro Area. According to the results, the countries of NAFTA are more appropriate for the creation of monetary union than the countries of MERCOSUR. The countries of NAFTA achieve high correlation coefficients of supply and demand shocks (except Mexico for supply shocks).

Keywords: OCA theory; supply and demand shocks; the Euro Area; NAFTA; MERCOSUR

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About the article

Published Online: 2015-07-16

Published in Print: 2015-06-01


Citation Information: Review of Economic Perspectives, ISSN (Online) 1804-1663, DOI: https://doi.org/10.1515/revecp-2015-0018. Export Citation

© by Stanislav Kappel. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0)

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