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Real Convergence in the Euro Area. Are the New Member States Catching Up or Falling Behind?

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  • Ana-Maria Holobiuc

    (The Bucharest University of Economic Studies)

Abstract

The establishment of the Economic and Monetary Union and the accession of the Central and Eastern European countries have created both opportunities and challenges for the regional group. Nowadays, one of the most pressing challenge for the European Union is to achieve longterm economic convergence between its Members. The main purpose of this paper is to examine real convergence in the Euro Area by focusing on the economic performances of the New Member States. In order to capture the evolutions that occurred in the Euro Area between 1995 and 2019, we have studied β- and σ-convergence models. The results of our study suggest that the New Member States included in the Eurozone have made considerable progress in terms of catching up, experiencing higher growth rates than the early adopters. While in the New Member States, the income gaps significantly decreased between 1995-2019, the early adopters experienced an opposite trend: divergence. Consequently, in spite of the positive path of the New Members, convergence remains a desirable goal for the Euro Area.

Suggested Citation

  • Ana-Maria Holobiuc, 2020. "Real Convergence in the Euro Area. Are the New Member States Catching Up or Falling Behind?," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 161-165, August.
    • Handle: RePEc:ovi:oviste:v:xx:y:2020:i:1:p:161-165
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    References listed on IDEAS

    as
    1. Diaz del Hoyo, Juan Luis & Dorrucci, Ettore & Heinz, Frigyes Ferdinand & Muzikarova, Sona, 2017. "Real convergence in the euro area: a long-term perspective," Occasional Paper Series 203, European Central Bank.
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    More about this item

    Keywords

    European Union; Euro Area; real convergence; β-convergence; σ-convergence;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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