Heterogeneity, convergence and imbalances in the Euro area

Auray, Stéphane; Eyquem, Aurélien

doi:10.3917/reof.173.0117

Cited by 4 publications

(3 citation statements)

References 20 publications

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“…This enabled some member states to have higher than average inflation rates continuously. Auray and Eyquem (2021) showed that partial inflation convergence, together with the common monetary policy and the ECB interest rate created a large positive demand shock in peripheral countries, creating pressure on the relative prices of goods and services produced there. The boom in consumption and investment led to current account deficits.…”

Section: Literature Reviewmentioning

confidence: 99%

Inflation in Eurozone, Converging and Diverging Countries

Popović

2024

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The paper analyses the progress eurozone members made towards the convergence of inflation rates, which is a necessary condition for the effective implementation of the common monetary policy broadly appropriate for all members. It was expected that the common monetary policy would lead to the convergence of member states’ economic performance, including inflation rates. The literature review shows that the majority of authors agree that a significant convergence process occurred before 1999, but no further progress was made after that. Our analysis indicates that inflation processes in member countries are diverse. Namely, monetary stability has been achieved in some countries, while inflation is more volatile in others. There is an insufficient correlation between inflation rates, the different transmission of shocks to inflation and different exposure to risks of rising energy and food prices. We conducted a unit root test on the series of inflation differentials for each country to determine which countries were in a process of absolute convergence. In the group of the first 12 members, we found evidence of convergence for the majority of countries, as there is no unit root. Thus, individual countries indeed made progress toward greater monetary stability (and the EMU level). We examined the standard deviations of the inflation differentials in the group of converging countries (separately for converging core and peripheral countries) and found no evidence that these groups of countries are becoming more homogeneous. In the group of new EMU members, we found evidence of convergence towards the EMU average for only four countries in the period of their membership, but not in the previous period.

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Section: Literature Reviewmentioning

confidence: 99%

Inflation in Eurozone, Converging and Diverging Countries

Popović

2024

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“…Given the heterogeneity of EU's Member States (GNP, infrastructure, agricultural productivity, rate of new technologies integration etc.) (Auray and Eyquem, 2021;Reimer et al, 2023;Triantafyllidis et al, 2023;Petrović et al, 2024), the heterogeneity of agricultural structures across the Union (Kryszak and Herzfeld, 2021), and the farmers' heterogeneous attitudes towards sustainability related policies (Niskanen et al, 2021) the Commission should provide a wide range of alternatives that lead to that desired outcome. In an effort to address the farmers protests across the EU and de-escalate the rising tension, von der Leyen announced in 2024 the withdrawal of the Sustainable Use Regulation (Euronews, 2024b).…”

Section: Holistic Approach Of Agricultural "Sustainability"mentioning

confidence: 99%

A “Teal” Deal for European agriculture

MAVROEIDIS,

STAVROPOULOS,

ROUSSIS

et al. 2024

Not Sci Biol

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The European Union (EU) has been actively combating climate change for decades, and in 2019 it introduced its most ambitious project to date, the European Green Deal (EGD). EGD includes a variety of policies and strategies aimed at mitigating the adverse effects of climate change, foster an economic growth, and promote social equity. Recently, the European Commission has been contemplating the development of the European Blue Deal (EBD), which aims to address the growing water crises and water insecurity issues within the EU. Similar to the EGD, the EBD would encompass all sectors of the European economy, seeking integrated solutions to these pressing environmental problems. This review aims to assess the progress of the EGD, evaluate the objectives of the EBD, and provide insights into the factors that could either catalyze or hinder their effective and harmonious implementation. The concept of a "Teal Deal" (a combination of the blue and green color) which combines elements of both the EGD and the EBD, is explored, with particular emphasis on its implications for the agrifood sector. Here we argue on the necessity for a holistic approach to agricultural sustainability, rapid advancements in renewable energy, the adoption of crop diversification strategies, and the development of effective international policies to ensure global cooperation and support for these transformative initiatives. By addressing these key areas, the EU can make significant strides towards achieving its environmental and economic goals.

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“…Auray & Eyquem [3] showed that there was significant convergence of inflation rates among countries that formed EMU in 1999, when comparing average inflation rates in the period before financial crisis and before the advent of Monetary union. However, that convergence was not finished in later stages, leading to significant differences in real interest rates.…”

Section: Literature Reviewmentioning

confidence: 99%

Heterogeneity of inflation processes in European monetary union

Popović¹,

Janković²,

Lukić³

2022

Ekonomika preduzeća

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Paper analyses the extent to which inflation processes in Eurozone member countries are heterogeneous. Eurozone is composed of 19 different countries, are they similar enough to share the common currency? Significant heterogeneity of inflation processes makes the management of common monetary policy very complicated, since it poses contradicting demands, so it will not suit all members. Growing inflation has been very significant problem in the world since the beginning of 2021 and events in the first quarter of 2022 brought even higher, unprecedented rise in inflation rates. How might that influence the management of common monetary policy? Should we fear of new debt crisis in EMU? It was expected that Monetary union will support the integration of labor, product and capital markets, which will further reduce the heterogeneity of inflation processes. Literature review showed significant achievement in inflation convergence when comparing period before and after the advent of Monetary union, however problems occurred in later stages. Our analysis indicates significant departure of inflation process in majority of member countries from EMU average and among themselves. There is no statistically significant convergence of inflation rates, while there is a unit root in the series of standard deviations of inflation differentials. Coefficient of variations shows large differences in inflation rates in a single period, variability of inflation between members is very high, and variations of inflation seem insufficiently correlated. Inflation rates show significant persistence measured by autocorrelation coefficients, and there are differences among member countries showing that their inflation transmission processes differ.

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Heterogeneity, convergence and imbalances in the Euro area

Cited by 4 publications

References 20 publications

Inflation in Eurozone, Converging and Diverging Countries

Inflation in Eurozone, Converging and Diverging Countries

A “Teal” Deal for European agriculture

Heterogeneity of inflation processes in European monetary union

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