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| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Risk sharing and the adoption of the Euro |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of International Economics |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 0022-1996 |
| Volume | 141 |
| Page Range | 103727 |
| Date | 2023 |
| Abstract Text | This paper empirically evaluates whether adopting a common currency has changed the level of consumption smoothing of euro area member states. We construct a counterfactual dataset of macroeconomic variables through the synthetic control method. We then use the output variance decomposition of Asdrubali et al. (1996) on both the actual and the synthetic data to study if there has been a change in risk sharing and through which channels. We find that the euro adoption has reduced risk sharing and consumption smoothing. We further show that this reduction is mainly driven by the periphery countries of the euro area who have experienced a decrease in risk sharing through private credit. |
| Digital Object Identifier | 10.1016/j.jinteco.2023.103727 |
| Other Identification Number | merlin-id:23811 |
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| Keywords | Economics and econometrics, finance, risk sharing channels, European monetary union, synthetic control method |