Similarities of External Shock’s responses of Armenia and Russia: SVAR Approach

Abstract

The feasibility of EUAE countries to form a Monetary Union is analyzed. The paper uses SVAR methodology to examine impact of External Shocks to specific case of Armenia and Russia alongside with correlation analyses of responses. In this framework, empirical evidence allows to affirm that Armenia and Russia do not meet a criteria of Optimum currency area “similarities in external shock’s responses,” the results underline structural differences of economies and asymmetry in external shock’s responses, therefore EUEA countries are not ready for Monetary union, and deeper integration is needed.