Monetary integration vs. real disintegration: single currency and productivity divergence in the euro area # |
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Authors: | Alberto Bagnai Christian Alexander Mongeau Ospina |
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Affiliation: | 1. Department of Economics, Università ‘Gabriele d’Annunzio’ , Pescara, Italy alberto.bagnai@unich.it;3. Italian Association for the Study of Economic Asymmetries , Rome, Italy |
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Abstract: | Productivity slowdown plays a prominent role in the build-up of the euro area crisis. This phenomenon affected member countries asymmetrically, causing divergence in their productivity trends. Recent research traces this divergence back to monetary integration. After reviewing the arguments that link real “disintegration” of the euro area to its monetary integration, we assess them empirically by modelling the evolution of labour productivity using a panel of sectorial data. The results indicate that monetary unification may actually have fostered divergence in productivity trends, and suggest some economic policy measures that could prevent further divergence. |
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Keywords: | total factor productivity models of trade with scale economies macroeconomic issues of monetary unions labour productivity labour contracts |
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