The Euro Area Ten Years after Its Creation: (Divergent) Competitiveness and the Optimum Currency Area Theory
AbstractAs the euro is on its second decade, the European sovereign debt crisis and the ever more evident disparities in competitiveness among member states are prompting many to question whether monetary union is bringing more benefits than costs. The optimum currency area (OCA) theory provides a framework with several criteria for such analysis. In such context, we start by a descriptive analysis of the first twelve euro countries under six criteria, leading to a mixed conclusion on whether the EMU is closer or farther to fulfil them. Then we assess the impact of five OCA criteria on countriesâ€™ relative competitiveness. Differences in the growth of unit labour costs, the dissimilarity of trade and the differences in output growth were found to be the most significant. This way, we identify some causes of the divergent competitiveness between some EMU countries that contributed to weaker economic growth in some of them.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.
Volume (Year): 58 (2011)
Issue (Month): 5 (December)
Contact details of provider:
Web page: http://www.panoeconomicus.rs/
Optimum currency area; Euro area; Economic and Monetary Union (EMU); Competitiveness;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- F15 - International Economics - - Trade - - - Economic Integration
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marcus Kappler, 2011. "Business Cycle Co-movement and Trade Intensity in the Euro Area: is there a Dynamic Link?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 231(2), pages 247-265, April.
- Stefano Schiavo, 2005.
"Financial integration, GDP correlation and the endogeneity of optimum currency areas,"
25, University of Verona, Department of Economics.
- Stefano Schiavo, 2008. "Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas," Economica, London School of Economics and Political Science, vol. 75(297), pages 168-189, 02.
- Stefano Schiavo, 2008. "Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas," Sciences Po publications info:hdl:2441/9857, Sciences Po.
- Harris Dellas & George S.Tavlas, 2009.
"An Optimum-Currency-Area Odyssey,"
102, Bank of Greece.
- Alfonso Arpaia & Karl Pichelmann, 2007.
"Nominal and real wage flexibility in EMU,"
European Economy - Economic Papers
281, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Michael G. Arghyrou & Georgios Chortareas, 2008.
"Current Account Imbalances and Real Exchange Rates in the Euro Area,"
Review of International Economics,
Wiley Blackwell, vol. 16(4), pages 747-764, 09.
- Arghyrou, Michael G & Chortareas, Georgios, 2006. "Current Account Imbalances and Real Exchange Rates in the Euro Area," Cardiff Economics Working Papers E2006/23, Cardiff University, Cardiff Business School, Economics Section.
- Claude Lopez & David H. Papell, 2007.
"Convergence to Purchasing Power Parity at the Commencement of the Euro,"
Review of International Economics,
Wiley Blackwell, vol. 15(1), pages 1-16, 02.
- Claude Lopez & David H. Papell, 2003. "Convergence to Purchasing Power Parity at the Commencement of the Euro," University of Cincinnati, Economics Working Papers Series 2003-08, University of Cincinnati, Department of Economics.
- Claude Lopez & David H. Papell, 2003. "Convergence to Purchasing Power Parity at the Commencement of the Euro," Macroeconomics 0310008, EconWPA.
- Berger, Helge & Nitsch, Volker, 2005.
"Zooming Out: The Trade Effect of the EURO in Historical Perspective,"
2005/5, Free University Berlin, School of Business & Economics.
- Berger, Helge & Nitsch, Volker, 2008. "Zooming out: The trade effect of the euro in historical perspective," Journal of International Money and Finance, Elsevier, vol. 27(8), pages 1244-1260, December.
- Helge Berger & Volker Nitsch, 2005. "Zooming Out: The Trade Effect of the Euro in Historical Perspective," CESifo Working Paper Series 1435, CESifo Group Munich.
- Frankel, Jeffrey A & Rose, Andrew K, 1998.
"The Endogeneity of the Optimum Currency Area Criteria,"
Royal Economic Society, vol. 108(449), pages 1009-25, July.
- Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
- Campolmi, Alessia & Faia, Ester, 2011. "Labor market institutions and inflation volatility in the euro area," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 793-812, May.
- Koedijk, C.G. & Tims, B. & Dijk, M.A. van, 2004. "Purchasing Power Parity and the Euro Area," Research Paper ERS-2004-025-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
- Thomas D. Willett & Orawan Permpoon & Clas Wihlborg, 2010. "Endogenous OCA Analysis and the Early Euro Experience," The World Economy, Wiley Blackwell, vol. 33(7), pages 851-872, 07.
- Fleming, J Marcus, 1971. "On Exchange Rate Unification," Economic Journal, Royal Economic Society, vol. 81(323), pages 467-88, September.
- Romain Duval & Jørgen Elmeskov & Lukas Vogel, 2007. "Structural Policies and Economic Resilience to Shocks," OECD Economics Department Working Papers 567, OECD Publishing.
- Enrique Alberola-Ila & Tymo Tyrväinen, 1998.
"Is there Scope for Inflation Differentials in EMU? An Empirical Evaluation of the Balassa-Samuelson Model in EMU Countries,"
Banco de Espaï¿½a Working Papers
9823, Banco de Espa�a.
- Alberola, Enrique & Tyrväinen, Timo, 1998. "Is There Scope for Inflation Differentials in EMU? An Empirical Evaluation of the Balassa-Samuelson Model in EMU Countries," Research Discussion Papers 15/1998, Bank of Finland.
- Holger Zemanek & Ansgar Belke & Gunther Schnabl, 2010.
"Current account balances and structural adjustment in the euro area,"
International Economics and Economic Policy,
Springer, vol. 7(1), pages 83-127, May.
- Ansgar Belke & Holger Zemanek & Gunther Schnabl, 2010. "Current Account Balances and Structural Adjustment in the Euro Area," Ruhr Economic Papers 0176, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Fratzscher, Marcel & Stracca, Livio, 2008.
"The political economy under monetary union: has the euro made a difference?,"
Working Paper Series
0956, European Central Bank.
- Marcel Fratzscher & Livio Stracca, 2009. "The political economy under monetary union: has the euro made a difference?," Economic Policy, CEPR & CES & MSH, vol. 24, pages 307-348, 04.
- Torres,Francisco & Giavazzi,Francesco (ed.), 1993. "Adjustment and Growth in the European Monetary Union," Cambridge Books, Cambridge University Press, number 9780521440196, October.
- Holger Zemanek, 2010. "Competitiveness Within The Euro Area: The Problem That Still Needs To Be Solved," Economic Affairs, Wiley Blackwell, vol. 30(3), pages 42-47, October.
- Koedijk, Kees G. & Tims, Ben & van Dijk, Mathijs A., 2004.
"Purchasing power parity and the euro area,"
Journal of International Money and Finance,
Elsevier, vol. 23(7-8), pages 1081-1107.
- George Tavlas, 1994. "The theory of monetary integration," Open Economies Review, Springer, vol. 5(2), pages 211-230, March.
- repec:dar:vpaper:34447 is not listed on IDEAS
- João Silvestre & António Mendonça, 2007. "The Endogeneity of Optimum Currency Areas Criteria: Some Evidence from the European Union and Portugal," International Advances in Economic Research, Springer, vol. 13(1), pages 1-18, February.
- Su Zhou & Mohsen Bahmani-Oskooee & Ali M. Kutan, 2008. "Purchasing Power Parity before and after the Adoption of the Euro," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 134-150, April.
- Francesco Paolo Mongelli, 2008. "European Economic and Monetary Integration, and the Optimum Currency Area Theory," European Economy - Economic Papers 302, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Francesco Paolo Mongelli, 2005. "What is European Economic and Monetary Union Telling us About the Properties of Optimum Currency Areas?," Journal of Common Market Studies, Wiley Blackwell, vol. 43(3), pages 607-635, 09.
- Hein, Eckhard & Truger, Achim, 2005. "European Monetary Union: nominal convergence, real divergence and slow growth?," Structural Change and Economic Dynamics, Elsevier, vol. 16(1), pages 7-33, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivana Horvat) The email address of this maintainer does not seem to be valid anymore. Please ask Ivana Horvat to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.