Interdependence between U.S. and EU goods, money, and foreign markets and spillover effects

Abstract

The paper examines the interdependence in three different markets (goods, money, and foreign sectors) between the U.S. and the EU. A theoretical open economy macroeconomic model is used for the analysis and tested with data from the two entities. The results show that there is a tremendous economic interdependence between the U.S. and the EU, but the social and political
influences from the U.S. overshadow the economic ones. Both entities face serious problems, like deficits and unemployment and at the same time loss of competitiveness and heterogeneity in their own countries. The current trend of inconsiderate integration and internationalization will hurt the citizens in Europe, first, and in America soon.

JEL Classifications: C13, C22, C53,F41, F42