Working Paper: CEPR ID: DP9685
Authors: ngel estrada garca; jordi gal; david lopezsalido
Abstract: We study the extent of macroeconomic convergence/divergence among euro area countries. Our analysis focuses on four variables (unemployment, inflation, relative prices and the current account), and seeks to uncover the role played by monetary union as a convergence factor by using non-euro developed economies and the pre-EMU period as control samples.
Keywords: competitiveness; current account imbalances; inflation differentials; labor markets; macroeconomic convergence; relative prices
JEL Codes: E24; F31; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lack of stabilizing risk-sharing mechanisms (D52) | divergence in macroeconomic performance (F62) |
| common currency (F36) | divergence in unemployment rates (J69) |
| EMU (F36) | convergence in unemployment rates (J69) |
| financial crisis (G01) | reversal of unemployment convergence (J69) |
| inflation convergence (E31) | independence from EMU (F36) |
| current account balances (F32) | differences across euro area countries (F36) |