Impact of COVID-19 on real effective exchange rates of EU member countries : implications for a monetary union

Klutse Senanu Kwasi and Acheampong Timothy Yaw: Impact of COVID-19 on real effective exchange rates of EU member countries : implications for a monetary union.

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There is a lack of close historic parallel to the economic impact of COVID-19. The COVID19 shock has led to most economies in the Euro area experiencing exchange rate pressures, enormous job losses and contractions in output. By recognising that a stable currency has the tendency to reverse some of these challenges, this study investigates the impact of the pandemic on the exchange rate of all EU member countries. The main objective is to find the relationship between the government’s lockdown measures measured by the Stringency index and monthly exchange rate per the USD for all EU member countries. Using both a correlation and a Dynamic Ordinary Least Square (DOLS) model, the results show that as lockdown measures intensified, countries in Europe lost their competitiveness in the long-run. In the short-run however, only Cyprus, the Czech Republic and Greece lost their competitiveness as the lockdown measures intensified. The results also confirm the asymmetry of shocks in Europe, further questioning the benefits for countries seeking to adopt the Euro.

Item Type: Conference or Workshop Item
Heading title: Economic development and economic policy responses
Journal or Publication Title: Proceedings of the European Union’s Contention in the Reshaping Global Economy
Date: 2022
ISBN: 978-963-306-852-6
Page Range: pp. 25-35
Language: English
Place of Publication: Szeged
Event Title: The European Union’s contention in the reshaping global economy (2022) (Szeged)
Related URLs:
DOI: 10.14232/eucrge.2022.2
Uncontrolled Keywords: Európai Unió - pénzügy, Világjárvány hatása, Gazdaságpolitika - Európai Unió
Additional Information: Bibliogr.: p. 33-34. ; ill. ; összefoglalás angol nyelven
Subjects: 05. Social sciences
05. Social sciences > 05.02. Economics and business
Date Deposited: 2022. Mar. 29. 12:18
Last Modified: 2022. Nov. 08. 13:09

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