DIS Union of the Core and the Periphery


Abstract views: 176 / PDF downloads: 135

Authors

  • Igor Velickovski National Bank of the Republic of Macedonia, Kuzman Josifovski Pitu 1, 1000 Skopje, Republic of Macedonia, tel: ++ 389 23 108 401
  • Aleksandar Stojkov
  • Ivana Rajkovic

Abstract

This paper investigates the drivers of shock synchronization using quarterly data for 27 European countries over the period 1999–2013 and taking into account the difference between core and peripheral euro area and European transition countries. The results from panel error-correction models suggest that the euro area core has not been a strong magnetizer of the shock convergence of peripheral and transition countries since the euro's inception as a result of the offsetting effects of the various factors that affected the shock convergence process. In particular, the demand shock convergence was supported by the intra-industry trade developments and, to some extent, by the trade intensity, at least for the peripheral countries, but their effects were offset by divergent fiscal policies, production structure changes and financial flows. On the other hand, supply shocks registered a divergent tendency that was mainly driven by trade intensity flows and uncoordinated fiscal policies. These findings challenge the endogeneity hypothesis and support the specialization paradigm, which is concerning evidence for the future stability of the euro area.Keywords: Shock synchronization, Trade, Dynamic panel modelsJEL Classifications: E32, F10, C33

Downloads

Download data is not yet available.

Author Biography

Igor Velickovski, National Bank of the Republic of Macedonia, Kuzman Josifovski Pitu 1, 1000 Skopje, Republic of Macedonia, tel: ++ 389 23 108 401

Manager of Payment Systems Department

Downloads

Published

2017-12-11

How to Cite

Velickovski, I., Stojkov, A., & Rajkovic, I. (2017). DIS Union of the Core and the Periphery. International Journal of Economics and Financial Issues, 7(6), 159–174. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/5643

Issue

Section

Articles