No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Convergence Problems in the Eurozone
Abstract
This paper analyses the issue of convergence in the Eurozone. The overarching objective was to evaluate the monetary and fiscal convergence of the countries in the Eurozone during the recent period. A further goal was to establish recommendations boosting the economic efficiency of the analysed currency integration of the Eurozone. The paper pinpoints crucial theoretical underpinnings and the current analysis of the Eurozone. Empirical data pertinent to macroeconomic indicators, which were collated and statistically analysed, were also used to delineate crucial issues of convergence in the Eurozone.
Cel: Celem artykułu jest określenie korzyści oraz zagrożeń wynikających z wprowadzenia euro w Polsce w kontekście teorii optymalnych obszarów walutowych oraz kryteriów konwergencji. Metodyka badań: Wykorzystano krytyczną analizę literatury przedmiotu, polskiej i zagranicznej, oraz analizę statystyczną opartą na danych Banku Światowego, Komisji Europejskiej, Głównego Urzędu Statystycznego, Eurostatu oraz TradingEconomics.com. Wyniki badań: Obecnie strefa euro nie spełnia założeń TOOW, zaś Polska nie spełnia kryteriów konwergencji. W związku z tym Polska nie może przystąpić do strefy euro. Ponadto z przystąpieniem do europejskiej unii walutowej może się wiązać więcej zagrożeń niż korzyści. Wnioski: Polska jako kraj z derogacją jest zobligowana do spełnienia kryteriów konwergencji i przystąpienia do strefy euro, niemniej jednak obecnie nie jest na to gotowa. Polska ze strefą euro mogłaby stworzyć optymalny obszar walutowy. Wkład w rozwój dyscypliny: Uzyskane wyniki wpisują się w rozważania na temat europejskiej integracji monetarnej oraz perspektyw wprowadzenia euro w Polsce i mogą stanowić przesłankę do dalszych badań.
A country's suitability for entry into a currency union depends on a number of economic conditions. These include, inter alia, the intensity of trade with other potential members of the currency union, and the extent to which domestic business cycles are correlated with those of the other countries. But international trade patterns and international business cycle correlations are endogenous. This paper develops and investigates the relationship between the two phenomena. Using thirty years of data for twenty industrialised countries, we uncover a strong and striking empirical finding: countries with closer trade links tend to have more tightly correlated business cycles.
A small labour market model for the six largest euro area countries (Germany, France, Italy, Spain, the Netherlands, Belgium) is estimated in a state-space framework. The model entails, in the long run, four driving forces: a trend labour force component, a trend labour productivity component, a long-run inflation rate and a trend hours worked component. The short run dynamics is governed by a VAR model including six shocks. The state-space framework is convenient for the decomposition of endogenous variables in trends and cycles, for shock decomposition, for incorporating external judgement, and for running conditional projections. The forecast performance of the model is rather satisfactory. The model is used to carry out a policy experiment with the objective of investigating whether euro area countries differ in the labour market adjustment to a reduction in labour costs. Results suggest that, following the 2008-09 recession, moderate wage growth would significantly help delivering a more job-intense recovery.
Ever since its inception, the EMU has been subject to controversy. The fiscal policy rules embedded in the Maastricht Treaty,
and clarified in the Stability and Growth Pact (SGP), are probably the most contentious. The SGP has constantly been accused
of being too rigid and of forcing procyclicality in fiscal policy. However, in an influential paper Galí and Perotti (2003) concluded that discretionary fiscal policy has actually become more countercyclical in EMU countries since the Maastricht
Treaty. This paper argues that this conclusion stands up to several robustness tests using ex-post data, including the use
of institutional variables, but not to the use of real-time data. Using ex-post data, there is some evidence pointing to a
more countercyclical use of discretionary fiscal policy (or at least to less use of procyclical discretionary fiscal policy).
However, the use of real-time data for the period 1999–2006 reveals that discretionary fiscal policy has been designed to
be procyclical. Hence, the actual acyclical behaviour of discretionary fiscal policy in the period after 1999 seems to be
simply the result of errors in forecasting the output gap, and not the result of a change in the intentions of policy-makers.
As a result, there is no evidence to support the view that Maastricht rules have forced euro-area policy-makers to change
their behaviour and design countercyclical discretionary fiscal policies.
This paper examines the potential for increased cross-border labour mobility within the EU-25 and considers the costs and benefits of any increase in labour mobility to both sending and receiving countries in the medium to long run. Evidence from previous EU enlargement experiences, academic studies, the existence of barriers to mobility within the EU and the economic determinants of migration all indicate a moderate potential for increased migrant flows. The magnitude of cross-border labour flow in the medium to long run will most likely be largely a function of the demand for migrants and the speed at which the EU-8 catches up economically with the EU-15. If broad-based economic growth and social development continues in the EU-8, labour migration will most likely decrease. In addition, faster population ageing in the EU-8 tends towards dampening migration flow from the new Member States in the medium term. In terms of costs and benefits, for the EU-8 countries labour migration, especially in the short run, may present a number of challenges. Emigration may tend to weigh disproportionally on the pool of young and educated workers, aggravating labour market bottlenecks in a number of EU-8 countries. For the EU-25 as a whole, cross-border labour mobility is likely to offer a number of advantages, by allowing a more efficient matching of workers‘ skills with job vacancies and facilitating the general upskilling of European workforces. The current restrictions on labour mobility from the EU-8 countries to the other EU member countries stand in contrast with one of the central principles of the EU – the free movement of labour. Furthermore, these restrictions may decrease the efficient use of labour resources in the face of demographic change and globalisation and hamper an important adjustment mechanism within EMU. Delaying the removal of these barriers may be costly for the EU-25 at a time when leaders are concerned about Europe‘s international competitiveness and may increase illegal work in a number of countries. Finally, it would not be beneficial for Europe to loose a significant part of the most agile and talented individuals from the new Member States to more traditional migration centres such as the US and Canada.
Unia Europejska na rozstajach
- J Barcz
BARCZ J. 2008. Unia Europejska na rozstajach. Instytut Wydawniczy EuroPrawo, Warszawa.
The Financial Crisis and the Future of the Eurozone. Bruges European Economic Policy Brieings
- P De Grauwe
DE GRAUWE P. 2010. The Financial Crisis and the Future of the Eurozone. Bruges European Economic
Policy Brieings, 21.
Endogeneites of Optimum Currency Areas
- P De Grauwe
- F P Mongelli
DE GRAUWE P., MONGELLI F.P. 2005. Endogeneites of Optimum Currency Areas. ECB Working Paper
Series, 468.
Euro adoption and Maastricht criteria: Rules or discretion?
JONAS J. 2006. Euro adoption and Maastricht criteria: Rules or discretion? Econ. Systems, 30:
328-345.
A Theory of Optimum Currency Areas
- Mundell R
MUNDELL R. 1961. A Theory of Optimum Currency Areas. Amer. Econ. Rev., 51(4): 657-665.
Raport na temat pełnego uczestnictwa Rzeczypospolitej Polskiej w trzecim etapie unii gospodarczej i walutowej
- Rogut A
ROGUT A. 2010. Koszty i zagrożenia związane z wejściem Polski do strefy euro. In: Mechanizmy
funkcjonowania strefy euro. Eds. P. Kowalewski, G. Tchorek, J. Górski. NBP, Warszawa.
Raport na temat pełnego uczestnictwa Rzeczypospolitej Polskiej w trzecim etapie unii gospodarczej
i walutowej. 2009. NBP, Warszawa.
Kierunki zmian w systemie zarządzania fiskalnego strefą euro
- Rosati D
ROSATI D. 2010. Kierunki zmian w systemie zarządzania fiskalnego strefą euro. Ekonomista, 4:
609-645.
Teoretyczne podstawy integracji walutowej
- Tchorek G
TCHOREK G. 2010. Teoretyczne podstawy integracji walutowej. In: Mechanizmy funkcjonowania strefy
euro. Eds. P. Kowalewski, G. Tchorek, J. Górski. NBP, Warszawa.
Rynek Unii Europejskiej. Koncepcja i zasady funkcjonowania. Wydawnictwo Akademii Ekonomicznej w Krakowie
- J W Wiktor
WIKTOR J.W. 2005. Rynek Unii Europejskiej. Koncepcja i zasady funkcjonowania. Wydawnictwo
Akademii Ekonomicznej w Krakowie.
How to rebuild the stability pact
- C Wyplosz
WYPLOSZ C. 2005. How to rebuild the stability pact. Financial Times, http://www.ft.com/intl/cms/s/0/
b20bfa32-73f8-11d9-b705-00000e2511c8.html#axzz1Rt5A4iaR (access on 28.06.2011).