The impact of EMU on growth and employment

Technical report


European Commission, Directorate General Economic and Financial Affairs, Barrell, R., Gottschalk, S., Holland, D., Khoman, E., Liazde, I. and Pomerantz, O. 2008. The impact of EMU on growth and employment. Brussels ,Belgium European Commission. https://doi.org/10.2765/63598
TypeTechnical report
TitleThe impact of EMU on growth and employment
AuthorsEuropean Commission, Directorate General Economic and Financial Affairs, Barrell, R., Gottschalk, S., Holland, D., Khoman, E., Liazde, I. and Pomerantz, O.
Abstract

This study addresses and evaluates the impacts of the introduction of the euro on both actual and potential output and employment. In order to achieve this, a descriptive and analytical examination of developments before and after the launch of the euro is undertaken, with comparisons drawn between countries that are EMU members and non-EMU members. There are several channels through which the euro may have affected growth and employment: greater transparency and its impact on competitiveness and the effectiveness of the single market; integration of financial markets, which may raise productivity; and a more stable macroeconomic environment, which affects risk and investment decisions. We analyse the impact of each of these channels on the drivers of growth, after controlling for factors such as workforce skills, research base, openness, demographic developments and structural reform on the evolution of output. The central result of our study is that EMU affects output growth directly and also promotes reductions in output and real effective exchange rate volatility and thereby influences the accumulation of productive capital. Many potential concerns preceding the launch of the euro seem to have been unfounded, and our work suggests that the effects of EMU that we observe have been beneficial for economic growth and employment overall. Our analysis suggests that the direct positive effects of EMU are likely to be larger in the core countries, despite their recent slow growth, and that EMU may lead to agglomeration of activities.

LanguageEnglish
ISSN1016-8060
ISBN
Electronic9789279082436
PublisherEuropean Commission
Place of publicationBrussels ,Belgium
Publication dates
Online01 Apr 2008
Print16 Jun 2008
Publication process dates
Deposited15 Feb 2021
Accepted01 Mar 2008
Output statusPublished
Additional information

European Economy. Economic Papers 318. April 2008

Digital Object Identifier (DOI)https://doi.org/10.2765/63598
Institution nameEuropean Commission
Department nameDirectorate-General for Economic and Financial Affairs
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