Buti, M. & Turrini, A. (2015) “Three waves of convergence. Can Eurozone countries start growing together again?“, VoxEU Organisation, 17 Απριλίου.
An oft expressed view is that the Eurozone is a straitjacket on periphery members and income convergence has slowed, halted or reversed. This column argues that EZ convergence never stopped. What changed was the type of convergence. Today’s convergence is neither nominal nor real, it is structural. Structural convergence presents a basis for renewed real convergence. However, for this to happen, the right institutions and policies need to be in place at both European and national levels.
There is a widespread view that the monetary union is now acting as a straitjacket on countries in the periphery, that it’s no longer delivering convergence in living standards. In this vein, the Euro Summit of 24 October 2014 called for work to continue to “develop concrete mechanisms for stronger economic policy coordination, convergence, and solidarity”, and invited the President of the European Commission, in close cooperation with the President of the Euro Summit, the President of the Eurogroup, and the President of the European central Bank, “to prepare next steps on better economic governance in the euro area”.1
This column argues that convergence in the Eurozone has never stopped – what changed over the main phases of the monetary union was the type of convergence.
The type of convergence currently at work is neither nominal convergence (i.e., convergence in nominal variables like inflation and interest rates) nor real convergence as commonly understood (i.e., convergence in per capita incomes) but a convergence that concerns the structure of the economy.
Structural convergence is posing the basis for renewed real convergence. However, for this to happen, the right institutions and policies need to be in place at the EU/EZ level and the national level.
Σχετικές αναρτήσεις:
- Bartelsman, E., di Mauro, F. & Dorrucci, E. (2015) “Eurozone rebalancing: Are we on the right track for growth? Insights from the CompNet micro-based data“, VoxEU Organisation, 17 Μαρτίου.
- De Grauwe, P. (2014) “The wrong medicine, The Eurozone’s remedies against sluggish growth rates aren’t working. The problem: a misdiagnosis of the illness“, The European Magazine, 26 Αυγούστου.
- Boone, Laurence, Céline, Renucci, Ruben Segura-Cayuela, (2013), “Eurozone: Looking for growth”, www.voxeu.org, 25 Μαρτίου.