Economic Convergence in the Euro Area: Coming Together or Drifting Apart?
IMF Working Papers, January 23, 2018
Source details
- Canonical URL
- Economic Convergence in the Euro Area: Coming Together or Drifting Apart?
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Bibliographic details
- Authors: Jeffrey R. Franks, Bergljot B Barkbu, Rodolphe Blavy, William Oman, Hanni Schoelermann
- Published: January 23, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484338490.001
Summary and key findings
- Examines economic convergence among euro area countries on multiple dimensions.
- Nominal convergence occurred for inflation and interest rates.
- Real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency.
- Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis.
- New euro area members have seen real income convergence.
- Business cycles became more synchronized, but the amplitude of those cycles diverged.
- Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes.
Policy implications and recommendations
- Income convergence requires reforms boosting productivity growth in lagging countries.
- Cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies.
- Steps to deepen the single market are recommended to support cyclical and financial convergence.
Subject areas and keywords
- Subject: Business cycles, Economic growth, Economic integration, Financial cycles, Financial sector policy and analysis, Inflation, Monetary unions, National accounts, Personal income, Prices
- Keywords: area capital flow; area goods trade; area trade; business cycle; business cycles; common currency; Convergence; current account; Economic and Monetary Union; euro; euro area; euro area goods trade; euro introduction; exchange rate; financial cycles; fiscal policy; Global; high-inflation country; higher-inflation country; Inflation; inflation convergence; inflation differential; intra-euro area goods trade; Monetary unions; Optimum Currency Area; Personal income; synchronization; WP
Content in this bundle
- Economic Convergence in the Euro Area: Coming Together or Drifting Apart?, WP/18/10, January 2018