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Did the euro change the effect of fundamentals on growth and uncertainty?

Luque, J.; Taamouti, A.

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Authors

J. Luque



Abstract

We present empirical evidence on whether the introduction of the euro has changed the effect of economic fundamentals on the growth rates of euro countries’ GDPpc and GDPpc volatility. We find that there is a statistically significant structural break in the impact of increments in government debt on both economic growth and uncertainty. In particular, after adoption of the euro increments in government debt decreased growth and increased uncertainty. These results are robust to a battery of checks, including exclusion of the recent financial crisis period, comparison with non-euro European countries, and controlling for different debt/GDP ratios.

Citation

Luque, J., & Taamouti, A. (2014). Did the euro change the effect of fundamentals on growth and uncertainty?. BE Journal of Macroeconomics, 14(1), 625-660. https://doi.org/10.1515/bejm-2013-0133

Journal Article Type Article
Publication Date Aug 15, 2014
Deposit Date Oct 16, 2014
Publicly Available Date Mar 29, 2024
Journal BE Journal of Macroeconomics
Publisher De Gruyter
Peer Reviewed Peer Reviewed
Volume 14
Issue 1
Pages 625-660
DOI https://doi.org/10.1515/bejm-2013-0133
Keywords Currency union, Euro zone, Fundamentals, GDPpc growth rate, GDPpc growth rate volatility, Government debt.
Public URL https://durham-repository.worktribe.com/output/1419291

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Copyright Statement
The final publication is available at www.degruyter.com.




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