Assessing Determinants of Macroeconomic Policy on Real Convergence and Growth: A Comparative Study of the Eurozone and ASEAN

This study mainly examines the role of macroeconomic policy variables associated with Maastricht Convergence Criteria (MC), using various approaches to analyze comparatively differences in growth and convergence in income, productivity, and unemployment between a developed, economically integrated area (Eurozone) and a developing one (ASEAN), a decade before and after the euro was introduced. The most interesting issue is whether macroeconomic policy coordination in the Eurozone has had an influence and improves the region’s economic performance, compared to a region that does not have such a policy. Based on estimations, convergence was found to be conditional rather than unconditional, except with respect to unemployment and productivity in the Eurozone. Imposing macroeconomic policy variables associated with MC on convergence and growth in the Eurozone and ASEAN makes it possible to determine any significant influence. Although results were mixed in different estimations, in all equations, joint variables imply that those variables should not be ignored in promoting convergence and growth in both regions. Generally, the Eurozone has higher real per-capita GDP, productivity, and unemployment, and more stable growth in GDP and productivity, but ASEAN performed better in terms of growth of income and productivity, and in low unemployment levels, as suggested also by difference-in-difference and decomposition analysis.