A withdrawal from the Eurozone: Some Simulation Studies with the NiGEM Model

A withdrawal of a member state from the EMU due to market pressure has been a rather popular topic in the public debate in recent years. However, the effects of a withdrawal  have been analysed quantitatively surprisingly little. Discussions have been concentrated on the crisis countries, but as the Finnish economic difficulties have deepened also on Finland.

In the report, the effects of the potential withdrawal of Greece, one of the weakest economies in
the EMU, is studied first. In addition we try to sketch the economic effects of a withdrawal  of
the relatively more bal- anced Finland. The analysis is made using an international econometric
model (NiGEM), where the global economy and the individual economies are described in a rather detailed way based on economic theory and past economic behaviour.

Benefits and costs, measured with effects  on the GDP, of a withdrawal  are related in the short
and particu- larly in the longer run to the ability of labour markets to achieve sustainable wage
agreements and to the ability to keep the financial markets calm.

JEL: F45, F47
Datum: 14.11.2014
Sidar: 34
Pris: 15 €
Språk: Finska
ISSN: 2323-2455
ISSN 2323-2447
ETLA Raportit – Reports 39