Patterns of Convergence and Divergence in the Euro Area

• Authors: Jordi Galí.
• BSE Working Paper: 110207 | September 15
• Keywords: labor markets , inflation differentials , macroeconomic convergence , competitiveness , current account imbalances , relative prices
• JEL codes: E24, F31, O47
• labor markets
• inflation differentials
• macroeconomic convergence
• competitiveness
• current account imbalances
• relative prices

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.