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You are looking at 1 - 10 of 29 items for :

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Cover IMF Working Papers
The Trade Impact of China on EMU: Is It Even Across Members?
Mrs. Esther Perez Ruiz and Mr. Uffe Mikkelsen
This paper investigates the asymmetries in trade spillovers from sector-specific technology shocks in China to selected euro area countries. We use a Ricardian-gravity trade model to estimate sectoral competitiveness in individual euro area countries. Simulations on the impact of productivity shocks in Chinese textiles and machinery suggest that the required adjustment in wages, prices, and factor re-allocation is widely heterogenous across euro area countries on accounts of their different specialization patterns. This raises the question of the distribution of gains and losses from external trade shocks.
Keywords:
WP; International trade; China; European Monetary Union; sectoral specialization; trade share; EMU trade; surplus nation; Ricardian-gravity trade model; textiles' share; goods spending; goods market; nominal wages decline; Euro area; trade theory; exports to the euro area; cost provider; Wages; Trade deficits; Exports; Competition; Global
Cover IMF Working Papers
Measuring the Trade Effects of EMU
Mr. Hamid Faruqee
This paper examines the impact of European Economic and Monetary Union (EMU) on trade within the euro area. Using panel data for 22 industrial countries, the analysis estimates the effect of the euro's arrival on area-wide trade compared to bilateral trade flows between other industrial countries. Controlling for other influences according to the "gravity" model of trade, the panel analysis employs cointegration techniques to obtain reliable point estimates of EMU trade effects. Cross-country differences with respect to EMU trade gains and underlying factors accounting for these differences are also further explored.
Keywords:
WP; trade; monetary union; trade gain; EMU trade effect; Currency unions; gravity model; bilateral trade; EMU trade impact; -area trade; EMU membership; industry trade share; aggregate EMU variable; Monetary unions; Trade balance; Currencies; Labor unions; Exchange rates; Europe
Cover IMF Working Papers
Measuring the Trade Effects of EMU
Mr. Hamid Faruqee

the literature on currency unions and trade. Recent developments in external and internal trade flows for the European Union are then briefly reviewed to provide a broader context for the empirical analysis that follows. Following a description of the econometric framework and variables, panel estimates of the EMU trade effects at the area-wide and national levels are then examined. Determinants underlying cross-country differences with respect to trade gains is then further explored. The final section offers concluding remarks. II. R elated L iterature The

Keywords:
WP; trade; monetary union; trade gain; EMU trade effect; impact of EMU; EMU trade gain; trade pattern; trade-creating effect; EMU experience
Cover IMF Working Papers
Front Matter
Mr. Hamid Faruqee

References Tables 1. EMU Impact on Trade 2. Area-Wide and Country EMU Trade Effects 3. Intra-Industry Trade Shares, 1997 4. “Internal Market Scoreboard,” 1998 Appendix Tables A1. Panel Unit Root Tests A2. Panel Cointegration Statistics A3. EMU Trade Effects and Country Deviations Figures 1. Recent Trends in Euro-Area Goods Trade 2. Intra-Area Trade Gains under EMU 3. Dynamic Pattern of EMU Trade Effects 4. Trade Creation versus Trade Diversion Under EMU 5. Potential Determinants of EMU Trade Gains at the Country Level

Keywords:
WP; trade; monetary union; trade gain; EMU trade effect
Cover IMF Staff Country Reports
Portugal: Selected Issues
International Monetary Fund
This Selected Issues paper of Portugal highlights the discussions on the requirement of policies to overcome structural and cyclical impediments to growth, and secure fiscal consolidation. It analyzes the strength of the company balance sheets in supporting the rebound from recession, and also the links between corporate balance sheet strength and investment. It reviews the challenges in the Portuguese economy, the impact of European Union enlargement on Portuguese trade, the pension prospects, and the implications of various policy reform scenarios.
Keywords:
ISCR; CR; Portugal; pension; EU average; pension expenditure; chapter III; trade benefit; EU trade; investment-balance sheet sensitivity; Pension spending; Financial statements; Pensions; Monetary unions; Stock markets; Europe
Cover IMF Working Papers
Monetary Policy Under EMU: Differences in the Transmission Mechanism?
Mr. Benedict J. Clements, Mr. Zenon Kontolemis, and Mr. Joaquim Vieira Ferreira Levy
This study identifies differences in the monetary policy transmission mechanism across the countries in the euro area. It is argued that part of the differences in the response of economic activity to monetary policy during the pre-EMU period, found in other studies, reflected differences in monetary policy reaction functions, rather than different transmission mechanisms. In light of this, the paper constructs an empirical model on the basis of common reaction functions. The results confirm that even when a common monetary policy is implemented, its effects on economic activity are likely to differ across EMU countries. The paper also constructs an aggregate measure of the effect of monetary policy on prices and output. Finally, the paper examines the relative strength of the credit, exchange rate, and interest rate channels of monetary transmission in EMU countries.
Keywords:
WP; transmission mechanism; EMU model; reaction function; European Monetary Union; Monetary Policy; EMU difference; monetary policy shock; EMU economy; Exchange rates; Credit; Monetary transmission mechanism; Inflation; Consumer price indexes; Europe
Cover IMF Working Papers
Is Fiscal Policy Coordination in EMU Desirable?
Mr. Roel M. W. J. Beetsma, Mr. Xavier Debrun, and Mr. Franc Klaassen
It is widely argued that Europe's unified monetary policy calls for international coordination at the fiscal level. We survey the issues involved in such coordination in the perspective of macroeconomic stabilization. A simple model identifies the circumstances under which coordination may be desirable. Coordination is beneficial when the cross-country correlation of the shocks is low. However, given the potentially adverse reaction by the ECB (as a result of free-riding or a conflict on the orientation of the policy mix), fiscal coordination is likely to prove counterproductive when demand or supply shocks are highly symmetric across countries and the governments are unable to acquire a strategic leadership position vis-à-vis the ECB.
Keywords:
WP; monetary policy; fiscal authorities; interest rate; aggregate demand; EMU; fiscal coordination; shocks; demand management; loss function; solvency constraint; governments vis-à-vis; point of view; Representative government; inflation rate; Inflation; Supply shocks; Real interest rates; Price stabilization; Europe; E. fiscal policy coordination; Policy coordination; EMU desirable; IMF Institute
Cover IMF Working Papers
Characteristics of the Euro, the Demand for Reserves, and Policy Coordination Under EMU
Mr. Paul R Masson and Mr. Bart Turtelboom
The success of European Economic and Monetary Union (EMU) will depend on the stability of the euro. The monetary policy framework is yet to be decided, but is likely to involve either money or inflation targeting. Stochastic simulations compare the outcomes for major macroeconomic and financial variables pre- and post-EMU under both policy rules, as well as under an inflation targeting rule that includes output. Implications for the euro as a reserve currency are examined in the light of the expected returns and covariances among reserve currencies. The role of the exchange rate as an indicator and incentives for policy coordination with other major countries are also discussed.
Keywords:
WP; currency; dollar; euro; deutsche mark; EU country; foreign exchange; currency denomination; EMU simulation; EU currency; pound sterling; currency composition; transmission mechanism; dollar holding; yen share; Currencies; Exchange rates; Inflation targeting; Monetary unions; Inflation; Europe; Global
Cover IMF Working Papers
Global Equilibrium Exchange Rates: Euro, Dollar, “Ins,” “Outs,” and Other Major Currencies in a Panel Cointegration Framework
Ms. Susana Garcia Cervero, J. Humberto Lopez, Mr. Enrique Alberola Ila, and Mr. Angel J. Ubide
This paper presents a methodology for calculating bilateral equilibrium exchange rates for a panel of currencies in a way that guarantees global consistency. The methodology has three parts: a theoretical model that encompasses the balance of payments and the Balassa-Samuelson approaches to real exchange rate determination; an unobserved components decomposition in a cointegration framework that identifies a time-varying equilibrium real exchange rate; and an algebraic transformation that extracts bilateral equilibrium nominal rates. The results uncover that, by the start of Stage III of the European Economic and Monetary Union (EMU), the euro was significantly undervalued against the dollar and the pound, but overvalued against the yen. The paper also shows that the four major EMU currencies locked their parities with the euro at a rate close to equilibrium.
Keywords:
WP; exchange rate; excess demand; Equilibrium Exchange Rates; Panel Cointegration; yen rate; equilibrium exchange rate; deviations from equilibrium; Swedish krona; Exchange rates; Real exchange rates; Currencies; Foreign assets; Purchasing power parity; Global