Britain and EMU: Assessing the costs in macroeconomic variability

Minford, Anthony Patrick Leslie ORCID: https://orcid.org/0000-0003-2499-935X, Meenagh, David ORCID: https://orcid.org/0000-0002-9930-7947 and Webb, Bruce David 2004. Britain and EMU: Assessing the costs in macroeconomic variability. The World Economy 27 (3) , pp. 301-358. 10.1111/j.1467-9701.2004.00602.x

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Abstract

Stochastic simulations are used on the Liverpool Model of the UK to assess the effect of macroeconomic stability of the UK adopting the euro. Instability increases substantially, particularly for inflation and real interest rates. A key factor is the extent of the euro’s instability against the dollar; by adopting a regional currency the UK imports this source of shocks, as well as losing its control of interest rates. The results are not highly sensitive to changes in assumptions about the degree of labour market flexibility, the use of fiscal policy, and increased convergence of monetary transmission.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance J Political Science > JN Political institutions (Europe) > JN101 Great Britain
Publisher:	Wiley-Blackwell
ISSN:	1467-9701
Related URLs:	http://www.patrickminford.net/Academic_P...
Last Modified:	08 Feb 2023 07:28
URI:	https://orca.cardiff.ac.uk/id/eprint/38737

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