What if the UK has Joined the Euro in 1999? An Empirical Evaluation using a Global VAR

Mohammad Pesaran, L. Vanessa Smith and Ron P. Smith
Authors registered in the RePEc Author Service: Ronald Smith and L. Vanessa Smith

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We provide a conceptual framework to analysis counterfactual scenarios using macroeconometric models. We consider UK entry to the euro. We derive conditional probability distributions for the difference between the future realisations of variables of interest subject to UK entry restrictions being fully met over a given period, and the alternative realisations without the restrictions. Economic interdependence means that such policy evaluation must take account of international linkages and common factors that drive fluctuations across economies. We use the Global VAR developed by Dees, di Mauro, Pesaran and Smith (2005). The paper briefly describes the GVAR which has been estimated for 25 countries and the euro area over the period 1979-2003. It reports probability estimates that output will be higher and prices lower in the UK and the euro area as a result of entry. It examines the sensitivity of these results to a variety of assumptions about UK entry.

Keywords: Global VAR (GVAR); Counterfactual Analysis; euro. (search for similar items in EconPapers)
JEL-codes: C32 C35 E17 F15 F42 (search for similar items in EconPapers)
Pages: 52
Date: 2005-05
New Economics Papers: this item is included in nep-eec, nep-mac and nep-mon
Note: EM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: What if the UK had Joined the Euro in 1999? An Empirical Evaluation Using a Global VAR (2005)
Working Paper: What if the UK had Joined the Euro in 1999? An Empirical Evaluation using a Global VAR (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0528

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