How bad is Divergence in the Euro-Zone? Lessons from the United States of America and Germany
AbstractThis paper compares relative unit labour cost developments in the countries of the euro-area since the beginning of the European Monetary Union (EMU) both with historical developments and with intra-regional unit labour cost developments in the United States of America and Germany. To this end, unit labour cost indices for the US states and census regions from 1977 to 1997 as well as for the German Länder from 1970 to 2004 have been constructed. Against this benchmark, it is found that unit labour cost increases since 1999 in Portugal and to a lesser extent in Spain and Greece can be judged as excessive, pointing at labour market rigidities which might impair smooth working of EMU in the future.
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 InfoPaper provided by Hamburg University, Department Wirtschaft und Politik in its series Macroeconomics and Finance Series with number 200605.
Length: 34 pages
Date of creation: Oct 2006
Date of revision:
Unit labor costs; divergence; convergence; Euro-zone; inflation;
Find related papers by JEL classification:
- F2 - International Economics - - International Factor Movements and International Business
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- N2 - Economic History - - Financial Markets and Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-23 (All new papers)
- NEP-EEC-2007-01-23 (European Economics)
- NEP-MON-2007-01-23 (Monetary Economics)
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.:
- Lane, Philip R., 2006.
"The Real Effects of EMU,"
CEPR Discussion Papers
5536, C.E.P.R. Discussion Papers.
- Philip R. Lane, 2006. "The Real Effects of EMU," The Institute for International Integration Studies Discussion Paper Series iiisdp115, IIIS.
- Olivier J. Blanchard & Lawrence H. Summers, 1986.
"Hysteresis and the European Unemployment Problem,"
NBER Working Papers
1950, National Bureau of Economic Research, Inc.
- Enderlein, Henrik, 2004. "Nationale Wirtschaftspolitik in der europäischen Währungsunion," Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung Köln, Max Planck Institute for the Study of Societies, volume 49, number 49.
- Bernd Hayo, 2006.
"Is European Monetary Policy Appropriate for the EMU Member Countries? A Counterfactual Analysis,"
Marburg Working Papers on Economics
200610, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Bernd Hayo, 2007. "Is European Monetary Policy Appropriate for the EMU Member Countries? A Counterfactual Analysis," Money Macro and Finance (MMF) Research Group Conference 2006 36, Money Macro and Finance Research Group.
- Merkl, Christian & Snower, Dennis J., 2006.
"The Caring Hand that Cripples: The East German Labour Market after Reunification,"
CEPR Discussion Papers
5656, C.E.P.R. Discussion Papers.
- Dennis J. Snower & Christian Merkl, 2006. "The Caring Hand that Cripples: The East German Labor Market after Reunification," American Economic Review, American Economic Association, vol. 96(2), pages 375-382, May.
- Robert E. Lucas Jr., 2003. "Macroeconomic Priorities," American Economic Review, American Economic Association, vol. 93(1), pages 1-14, March.
- Alberto Botta, 2014. "Structural Asymmetries at the Roots of the Eurozone Crisis: Whatâ€™s New for Industrial Policy in the EU?," Economics Working Paper Archive wp_794, Levy Economics Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ulrich Fritsche).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.