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How bad is divergence in the euro zone? Lessons from the United States and Germany


  • Sebastian Dullien
  • Ulrich Fritsche


This paper compares relative unit labor cost developments in the countries of the euro area since the beginning of the European Monetary Union (EMU) both with historical developments and with intraregional developments in the United States and Germany. Unit labor cost indices for the U.S. states and census regions from 1977 to 1997 as well as for the German Länder from 1970 to 2004 have been constructed. It is found that unit labor cost increases since 1999 in Portugal, and to a lesser extent, in Spain and Greece can be judged as excessive, which might impair a smooth working of the EMU in the future.

Suggested Citation

  • Sebastian Dullien & Ulrich Fritsche, 2009. "How bad is divergence in the euro zone? Lessons from the United States and Germany," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(3), pages 431-457, April.
  • Handle: RePEc:mes:postke:v:31:y:2009:i:3:p:431-457

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    References listed on IDEAS

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    Cited by:

    1. repec:elg:ejeepi:v:14:y:2017:i:1:p92-116 is not listed on IDEAS
    2. Nils aus dem Moore, 2010. "Eine Wirtschaftsregierung für Europa? – Die EU braucht bessere governance, aber kein gouvernement économique," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, December.
    3. Leila E. Davis & Charalampos Konstantinidis & Yorghos Tripodis, 2017. "A proposal for a federalized unemployment insurance mechanism for Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(1), pages 92-116, April.
    4. aus dem Moore, Nils, 2010. "Eine Wirtschaftsregierung für Europa? Die EU braucht bessere governance, aber kein gouvernement économique," RWI Positionen 41, RWI - Leibniz-Institut für Wirtschaftsforschung.
    5. Esposito, Piero, 2017. "Trade creation, trade diversion and imbalances in the EMU," Economic Modelling, Elsevier, vol. 60(C), pages 462-472.
    6. Alberto Botta, 2014. "Structural asymmetries at the roots of the eurozone crisis: what's new for industrial policy in the EU?," PSL Quarterly Review, Economia civile, vol. 67(269), pages 169-216.
    7. Esposito, Piero, 2015. "Trade (dis)Integration and Imbalances in the EMU," SEP Working Papers 2015/7, LUISS School of European Political Economy.
    8. Esposito, Piero & Messori, Marcello, 2016. "Improved Structural Competitiveness or Deep Recession? On the recent macroeconomic rebalances in the EMU," SEP Working Papers 2016/3, LUISS School of European Political Economy.
    9. repec:zbw:rwipos:041 is not listed on IDEAS


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