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Convergence in the Core Euro Zone under the Global Financial Crisis

Author

Listed:
  • Lee, Kang-Soek

    (Novancia Business School)

  • Mercurelli, Franceline

    (University of Orléans)

Abstract

A lack of economic convergence among euro member countries seems to be feeding euro-skepticism. Using a Structural Vector Auto Regression model combined with a time varying correlation analysis, we attempt to test the endogeneity theory for the three core euro members, i.e., France, Germany, and Italy. We provide evidence that the adoption of the euro has increased the symmetry of underlying shocks and accelerated the convergence process within this group. Even though the global crisis of 2007~2009 disturbed the European convergence process, the expected endogeneity effects continue to be generated, and the euro-skepticism is not corroborated.

Suggested Citation

  • Lee, Kang-Soek & Mercurelli, Franceline, 2014. "Convergence in the Core Euro Zone under the Global Financial Crisis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 29, pages 20-63.
    • Handle: RePEc:ris:integr:0621
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    Citations

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    Cited by:

    1. Francesca Di Iorio & Umberto Triacca, 2022. "A comparison between VAR processes jointly modeling GDP and Unemployment rate in France and Germany," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 31(3), pages 617-635, September.
    2. Brož, Václav & Kočenda, Evžen, 2018. "Dynamics and factors of inflation convergence in the European union," Journal of International Money and Finance, Elsevier, vol. 86(C), pages 93-111.
    3. Merih Uctum & Remzi Uctum & Chu-Ping C. Vijverberg, 2017. "The Eurozone Convergence through Crises and Structural Changes," Working Papers hal-04141629, HAL.
    4. José Carlos Vides & Antonio A. Golpe & Jesús Iglesias, 2018. "How did the Sovereign debt crisis affect the Euro financial integration? A fractional cointegration approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(4), pages 685-706, November.
    5. Maurer, Rainer, 2022. "Price levels in the European Monetary Union: Even tradables follow independent random walks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).

    More about this item

    Keywords

    Endogeneity Effect; Convergence; Euro; Structural VAR; Dynamic Correlation;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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