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Divergent Real Economies in Europe

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  • Pelagidis, Theodore

Abstract

In this paper, the well-known convergence programs, implemented by the EU member-states, are closely evaluated. Using descriptive statistical analysis and the changes in the real exchange rates as analytical cornerstone, the paper focuses on the economic performance of the member-states since the accord (Dec. 1991) and the ratification (Febr. 1992) of the Maastricht Treaty. Changes in the trade balance, industrial production, rates of unemployment, inflation and interest rates (short-term and long-term) are used as criteria of success both in real and nominal terms. The statistical outcomes are compared with the ones found in similar research done by R. Gordon. The paper ends with the evaluation of the results and the policy lessons which can be drawn by the different exchange rate policies followed by the member-states.

Suggested Citation

  • Pelagidis, Theodore, 1997. "Divergent Real Economies in Europe," MPRA Paper 106941, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:106941
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    File URL: https://mpra.ub.uni-muenchen.de/106941/1/MPRA_paper_106941.pdf
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    References listed on IDEAS

    as
    1. Peter B. Kenen, 1994. "Exchange Rates And The Monetary System," Books, Edward Elgar Publishing, number 259.
    2. Susan M. Collins, 1988. "Inflation and the E M S," NBER Working Papers 2599, National Bureau of Economic Research, Inc.
    3. Gordon, Robert J, 1996. "Macroeconomic Policy in the Presence of Structural Maladjustment," CEPR Discussion Papers 1493, C.E.P.R. Discussion Papers.
    4. Eichengreen, Barry & Bayoumi, Tamim, 1994. "The political economy of fiscal restrictions: Implications for Europe from the United States," European Economic Review, Elsevier, vol. 38(3-4), pages 783-791, April.
    5. Persson, Torsten & Tabellini, Guido, 1996. "Monetary Cohabitation in Europe," American Economic Review, American Economic Association, vol. 86(2), pages 111-116, May.
    6. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Robert J. Gordon, 2000. "The Aftermath of the 1992 ERM Breakup: Was There a Macroeconomic Free Lunch?," NBER Chapters, in: Currency Crises, pages 241-282, National Bureau of Economic Research, Inc.
    2. Pelagidis, Theodore, 1999. "On Economic Policies of Unemployment in Europe," MPRA Paper 107040, University Library of Munich, Germany.

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    More about this item

    Keywords

    Sacrifice ratio; European Monetary Unification; Convergence criteria; Real exchange rates; Maastricht Treaty.;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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