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Title: The Euro Area: Does one currency fit all?
Authors: Nikas, Christos
Stoupos, Nikolaos
Kiohos, Apostolos
Type: Article
Subjects: FRASCATI::Social sciences::Economics and Business
FRASCATI::Social sciences::Economics and Business::Economics
Keywords: European Monetary Union
real exchange rate
Euro Area 12
Issue Date: 2019
Source: International Review of Applied Economics
Volume: 33
Issue: 5
First Page: 642
Last Page: 658
Abstract: The sovereign debt crisis since the late 2000s in the Euro Area revealed that, in reality, there are two monetary unions in Europe: the core and the periphery. The core-north countries have sounder fiscal balances and lower inflation rates, whereas the periphery-south ones are more prone to higher inflation and public deficits. The principal aim of this paper is to explore which countries handle the nominal exchange rate of the euro. By doing this we will effectively challenge the statement ‘.one size fits all’ upon which the euro project was built. We used the real exchange rates of the initial 12 Eurozone members as an empirical instrument. Our evidence is based on the bivariate regression analysis and the Asymmetric Component GARCH (AC-GARCH) model. We discovered that the countries of the Eurozone core influence more the euro nominal exchange rate than the periphery ones. In addition, the euro is more vulnerable to the volatility shocks of the German and the French real exchange rates.
ISSN: 0269-2171
Other Identifiers: 10.1080/02692171.2018.1516742
Appears in Collections:Department of International and European Studies

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