Patterns of Convergence and Divergence in the Euro Area

• Authors: J. David López-Salido, Ángel Estrada and Jordi Galí
• BSE Working Paper: 722 | September 2015
• Keywords: labor markets, inflation differentials, macroeconomic convergence, competitiveness, current account imbalances, relative prices
• JEL codes: E24, F31, O47

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.