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Structural convergence and monetary integration in Europe

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Author Info
Clement van de Coevering

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Abstract

In the run-up to EMU, academic economists generally concluded the EU as a whole was not an optimum currency area (OCA). An important reason was the lack of structural convergence between the potential members of the monetary union. Nevertheless, the euro area currently consists of twelve countries. In the near to medium future, twelve additional countries will become EU Members; most of these countries have announced they want swift euro area entry. This paper reviews the literature on optimum currency areas to clarify the concept of structural convergence in the context of monetary integration. In addition, we operationalise OCA theory to assess structural convergence within Europe. The available evidence indicates considerable divergence within the current euro area and a generally slow process of convergence. In contrast, a number of new EU entrants have converged significantly in recent years towards levels of at least some existing members.

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Paper provided by Netherlands Central Bank, Monetary and Economic Policy Department in its series MEB Series (discontinued) with number 2003-20.

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Date of creation: Dec 2003
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Handle: RePEc:dnb:mebser:2003-20

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Related research
Keywords: accession countries; euro area; OCA theory; structural convergence;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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