@article{Asymmetry::740,
      recid = {740},
      author = {Chamie, Nick and DeSerres, Alain and Lalonde, René},
      title = {Optimum Currency Areas and Shock Asymmetry: A Comparison  of Europe and the United States},
      publisher = {Bank of Canada},
      address = {1994},
      pages = {1 online resource (49 pages)},
      abstract = {The authors examine the optimality of the European  Monetary Union (EMU) by estimating the degree of asymmetry  in shocks affecting thirteen European countries and  comparing the results to those obtained for nine U.S.  regions. First, they identify supply shocks and real and  nominal demand shocks by imposing restrictions on the  long-term effects of these on the level of output, prices  and money. This decomposition is necessary to develop a  measure of shock asymmetry that is not affected by  country-specific monetary policy disturbances. Next, the  unobservable common and specific components of structural  shocks are identified by means of state-space models. The  results show that both supply and real demand shocks  affecting the regions of the United States are much more  symmetrical than those affecting the European countries. In  Europe, only Germany and Switzerland are strongly related  to the symmetrical component of shocks. The fact that  Greece, Italy, Norway, Portugal and Sweden are not  statistically related to the common component of the shocks  suggests that they may face significant adjustment costs by  participating in the European Monetary Union. However,  these countries appear to be characterized by a smaller  degree of nominal rigidity, which could partly offset the  impact of asymmetrical shock by facilitating the  adjustment. Shocks affecting France, Belgium, the  Netherlands, the United Kingdom and Spain are largely  asymmetrical, though statistically related to the common  components.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/740},
      doi = {https://doi.org/10.34989/swp-1994-1},
}