Munich Personal RePEc Archive

Adopting the Euro: a synthetic control approach

Gabriel, Ricardo Duque and Pessoa, Ana Sofia (2020): Adopting the Euro: a synthetic control approach.

This is the latest version of this item.

[thumbnail of MPRA_paper_99622.pdf]

Download (1MB) | Preview


We investigate whether joining the European Monetary Union and losing the ability to set monetary policy affected the economic growth of Eurozone countries. We use the synthetic control approach to create a counterfactual scenario for how each Eurozone country would have evolved without adopting the Euro. We let this matching algorithm determine which combination of other developed economies best resembles the pre-Euro path of twelve Eurozone economies. Our estimates suggest that there were some mild losers (France, Germany, Italy, and Portugal) and a clear winner (Ireland). Nevertheless, a gross domestic product decomposition suggests that the drivers of the economic gains and losses are heterogeneous. In particular, our results show that for the majority of Eurozone countries, Euro spurred government consumption and deterred investment and private consumption. The common currency also stimulated trade for most cases but only Germany and Ireland bear positive net trade benefits.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.