Symmetry or Asymmetry in European Dollar Policies?
As of 1 January 1999, the introduction of the euro has brought about the definite vanishing of independent fluctuations in the national European exchange rates with the US dollar. As a consequence, the economies in the European Monetary Union (EMU) have given up a potential means for absorbing asymmetric shocks not only inside EMU, but also with the rest of the world. In other words, a unique euro-dollar exchange rate is less likely to manage shocks between the two sides of the Atlantic that spread asymmetrically across Europe.
KeywordsExchange Rate Real Exchange Rate Impulse Response Function European Monetary Union Nominal Exchange Rate
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