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"Estimated Stabilization Costs of the EMU,"
National Institute Economic Review, April 1998, 90-99.
pfd file (1,030 KB).
A multicountry econometric model and stochastic simulation are used to
estimate the stabilization costs of the European Monetary Union (EMU).
A measure of the variability of output and other variables
is computed for the current regime and for
the EMU regime. The results show that Germany is hurt the most
in terms of increased
output variability in moving from the current regime to the
It is interesting that Germany is hurt and France is helped according to
the stability estimates. I hope this paper may stimulate others to
perform similar experiments.