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One Size Fits Some : A Reassessment of EMU’s Core–periphery Framework

Author

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  • Wortmann, Marcus

    (Georg-August-University Göttingen)

  • Stahl, Markus

    (Georg-August-University Göttingen)

Abstract

This study provides a new multivariate assessment of core–periphery structures within the European Union. By applying different cluster algorithms to the broad set of Macroeconomic Imbalance Procedure indicators, we detect a relatively stability-oriented and homogeneous group of European Union core countries that would be suitable for having a common currency. Unlike previous results, our analysis shows that countries such as the United Kingdom, Denmark, and Sweden would also fit well within such a hypothetical euro area. However, Greece, Ireland, Italy, Portugal, and Spain plus Cyprus and Croatia on the southern periphery, as well as most of the countries of the eastern enlargement are found to form very distinct clusters in terms of competitiveness, indebtedness, and economic performance. Our findings thus reveal that a single monetary policy can be appropriate only for some countries, even when measured using the official Macroeconomic Imbalance Procedure scoreboard specifically designed to monitor the smooth functioning of the Economic and Monetary Union.

Suggested Citation

  • Wortmann, Marcus & Stahl, Markus, 2016. "One Size Fits Some : A Reassessment of EMU’s Core–periphery Framework," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 31(2), pages 377-413.
    • Handle: RePEc:ris:integr:0689
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    Citations

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    Cited by:

    1. Ana Rodríguez-Santiago, 2019. "What has Changed After the Great Recession on the European Cyclical Patterns?," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 15(2), pages 121-146, December.
    2. Coudert, Virginie & Couharde, Cécile & Grekou, Carl & Mignon, Valérie, 2020. "Heterogeneity within the euro area: New insights into an old story," Economic Modelling, Elsevier, vol. 90(C), pages 428-444.
    3. Robert Anderton & Arno Hantzsche & Simon Savsek & Máté Tóth, 2017. "Sectoral Wage Rigidities and Labour and Product Market Institutions in the Euro Area," Open Economies Review, Springer, vol. 28(5), pages 923-965, November.
    4. Ansgar Belke & Clemens Domnick & Daniel Gros, 2017. "Business Cycle Synchronization in the EMU: Core vs. Periphery," Open Economies Review, Springer, vol. 28(5), pages 863-892, November.
    5. Ahlborn, Markus & Wortmann, Marcus, 2018. "The core‒periphery pattern of European business cycles: A fuzzy clustering approach," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 12-27.
    6. Ivan Rubinic & Maks Tajnikar, 2019. "The Influence of the Economic Cycle on Eurozone Cross-Country Inequality Dynamics," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(2), pages 267-290.
    7. Korotaev, Andrey (Коротаев, Андрей) & Shulgin, Sergey (Шульгин, Сергей) & Zinkina, Yulia (Зинькина, Юлия), 2017. "Country Risk Analysis Based on Demographic and Socio-Economic Data [Анализ Страновых Рисков С Использованием Демографических И Социально-Экономических Данных]," Working Papers 031715, Russian Presidential Academy of National Economy and Public Administration.
    8. Peter Dreuw, 2023. "Structural time series models and synthetic controls—assessing the impact of the euro adoption," Empirical Economics, Springer, vol. 64(2), pages 681-725, February.

    More about this item

    Keywords

    Economic and Monetary Union; Macroeconomic Imbalance Procedure; Economic Integration; Macroeconomic Disparities; Cluster Analysis;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • F15 - International Economics - - Trade - - - Economic Integration
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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