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Trends in European Productivity and Real Exchange Rates

Author

Listed:
  • Matthew B. Canzoneri
  • Behzad Diba
  • Gwen Eudey

Abstract

Inflation has fallen dramatically in countries like Spain and Italy over the last decade, but the rate of increase in "home good" prices remains stubbornly higher than the rate of increase in "traded good" prices. The paper begins by showing that this discrepancy can be explained (at least in part) by trends in productivity; average labour productivity has grown much more slowly in the home good sector in these countries. The paper goes on to investigate the implications of productivity trends for the consistency of the Maastricht convergence criteria an for the differences in nation inflation rates after EMU.

Suggested Citation

  • Matthew B. Canzoneri & Behzad Diba & Gwen Eudey, 1996. "Trends in European Productivity and Real Exchange Rates," Working Papers 9610, Banco de España.
    • Handle: RePEc:bde:wpaper:9610
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    Citations

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    Cited by:

    1. Ansgar Belke & Daniel Gros, 1998. "Asymmetric shocks and EMU: Is there a need for a stability fund?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 33(6), pages 274-288, November.
    2. repec:onb:oenbwp:y::i:27:b:1 is not listed on IDEAS
    3. Lafrance, Robert & St-Amant, Pierre, 2000. "Les zones monétaires optimales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 76(4), pages 577-612, décembre.
    4. Matthew Canzoneri & Robert Cumby & Behzad Diba & Gwen Eudey, 1998. "Trends in European Productivity: Implications for Real Exchange Rates, Real Interest Rates and Inflation Differentials," Working Papers 27, Oesterreichische Nationalbank (Austrian Central Bank).
    5. Václav Žďárek & Jaromír Šindel, 2007. "Real and Nominal Convergence and the New EU Member States - Actual State and Implications," Prague Economic Papers, Prague University of Economics and Business, vol. 2007(3), pages 195-219.
    6. Ronald MacDonald, 2000. "The role of the exchange rate in economic growth: a euro-zone perspective," Working Paper Research 09, National Bank of Belgium.
    7. Camba-Méndez, Gonzalo & Garcí­a, Juan Angel & Rodriguez-Palenzuela, Diego, 2003. "Relevant economic issues concerning the optimal rate of inflation," Working Paper Series 278, European Central Bank.
    8. Václav Žďárek, 2009. "Challenges for the new EU member states on the road to the Eurozone," International Economics and Economic Policy, Springer, vol. 6(2), pages 157-177, July.
    9. repec:onb:oenbwp:y::i:61:b:1 is not listed on IDEAS
    10. Ronald MacDonald & Cezary Wójcik, 2006. "Catching-up, Inflation Differentials and Credit Booms in a Heterogeneous Monetary Union: Some Implications for EMU and new EU Member States," CESifo Working Paper Series 1761, CESifo.
    11. Peter Backé & Jarko Fidrmuc & Thomas Reininger & Franz Schardax, 2002. "Price Dynamics in Central and Eastern European EU Accession," Working Papers 61, Oesterreichische Nationalbank (Austrian Central Bank).
    12. MacDonald, Ronald & Wójcik, Cezary, 2008. "Catching-up and inflation differentials in a heterogeneous monetary union: Some implications for the euro area and new EU Member States," Economic Systems, Elsevier, vol. 32(1), pages 4-16, March.

    More about this item

    Keywords

    EUROPE; PRODUCTIVITY; EXCHANGE RATE; PRICES; INFLATION;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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