Академический Документы
Профессиональный Документы
Культура Документы
Deputy Director-General
European Commission, DG Economic and Financial Affairs
2
What is the issue?
3
EA: Towards an Optimum Currency Area (OCA)?
Reached in
OCA criteria
1999? 2007? 2015?
Trade integration
Wage flexibility
Financial integration
Note: Green / orange / red stand for 'fulfilled' / 'partly fulfilled' / 'not fulfilled'.
4
While difference in real GDP growth returned to pre-crisis
levels, cyclical differences remain high in the euro area
Real GDP growth rates Output gaps
(dispersion) (dispersion)
5 EA-11 4.0
EA-11
4 Current EA-19 3.5 Current EA-19
4 EA changing
composition 3.0 EA changing
composition
3
2.5
3
2.0
2
1.5
2
1.0
1
1 0.5
0 0.0
1995 2000 2005 2010 2015* 1995 2000 2005 2010 2015*
5
0
-5
-5
-10 -10
2000 2005 2010 2000 2005 2010
Portugal Greece
10 15
10
5
5
0
0
-5
-5
-10 -10
2000 2005 2010 2000 2005 2010
Note: Charts show the findings of a BVAR model conditional on the observed EA-12 GDP per capita. Shades of orange/yellow show
the distribution of the conditional forecasts of a BVAR model in levels, excluding the lower and higher 5% quantiles. Solid blue line:
the median of the distribution of the conditional forecasts in the BVAR in differences. Green line : actual values.
Source: European Commission (2015): Business cycle synchronisation in the euro area, Quarterly Report on the Euro Area,
forthcoming.
6
Euro area growth correlations are uneven,
but no less than among US states
Source: Goldman Sachs (2014): What makes a monetary union work?, Global Economics Paper: 224.
7
Strong nominal convergence pre-EMU; limited further progress
due to weak market pressure and policy complacency
HICP inflation 10-year govt. bond yield Public gross debt / GDP
(dispersion) (dispersion) (dispersion)
8 6
40
7 EA-11
EA-11 5
6 Current EA-19
Current EA-19
35
4 EA changing
5 EA changing
composition
composition
4 3
30
3
2
2 25
1 EA-11
1 Current EA-19
EA changing composition
0 0 20
1995 2000 2005 2010 2015* 1995 2000 2005 2010 1995 2000 2005 2010 2015*
Note: Dispersion measured as an unweighted standard deviation. "*" indicates projected values. HICP inflation measured as y-o-y
growth rate of the HICP index. 10-year nominal govt. bond yield. Public gross debt in line with EDP definition based on ESA 2010.
Source: Ameco.
8
Real convergence: Catching-up process mostly driven
by 'new' euro area Member States
GDP per capita (in PPS) before and after the start of the financial crisis
12 5
4 LT
EE
10 LV LV
(average growth 1999-2007)
DE
8 2
SK EE AT
EL LU excl. 'new'
1 BE
IE EA MS
6 SI FR
CY
ES FI 0 PT
NL excl. 'new'
ITFI NL LU
PT BE SI
4 FR EA MS -1
AT CY ES
MT DE IE
-2
IT
2
all -3 EL all
countries countries
0 -4
0 10 20 30 40 50 0 20 40 60 80
GDP per capita in thousands PPS (1999) GDP per capita in thousands PPS (2008)
Note: Countries which were in 1999 (left chart) and in 2008 (right chart) not members of the euro area are highlighted in red.
The black regression line is based on the full sample of countries, the blue one excludes the 'new' euro area Member States,
which are highlighted in red.
Source: Eurostat. 9
No clear real convergence trend across
US States / regions either
Real GDP per capita before and after the start of the financial crisis
4 10
8
(average growth 1999-2007)
regions 6
4 BEA
regions US
2
States
2
US
States
0
1
-2
0 -4
0 25 50 75 100 125 150 0 50 100 150 200
Real GDP per capita in thousands (1999) Real GDP per capita in thousands (2008)
Note: Blue entries relate to U.S. States, red entries to BEA regions. Real GDP per capita in thousand USD.
Source: U.S. Department of Commerce. Bureau of Economic Analysis (BEA).
10
While unemployment rates converged prior to the crisis,
there is no sign of productivity convergence
Unemployment rate Labour productivity
(dispersion) (dispersion)
7 20
6 18
5 16
4 14
3 12
2 10
EA-11
EA-11
Current EA-19
1 Current EA-19 8
Euro Area changing composition
Euro Area changing composition
0 6
Note: Dispersion measured as an unweighted standard deviation. Total unemployment rate in line with Eurostat definition.
Labour productivity measured as GDP at 2010 reference levels per hour worked. "*" indicates projected values.
Source: Ameco.
11
After the launch of EMU, capital flowed towards lower
productivity economies, but largely to less productive sectors
Actual current account levels Decomposition of growth in
(2007 and 2014, % of GDP) capital services by sector
(avg. annual contributions 1999-07)
10
2.5
5 Construction
2.0
Real estate activities
0
Services sectors/network
-5
1.5 industries/public utilities
-10 1.0
-15
Current account
0.5
Cyclically-adjusted CA
-20
0.0
-25
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
2007
2014
-0.5
LV EL EE CY PT ES IE SK SI IT FR DE NL ES PT IE EL IT DE FR NL AT BE FI
Source: European Commission (2013): External rebalancing Source: European Commission (2013): Catching-up
in the euro area: progress made and what remains to be, processes in the euro area, Quarterly Report on the Euro
Quarterly Report on the Euro Area, 13(4), p. 30. Area, 12(1), p. 10.
12
Financial fragmentation hampered the adjustment
process, but has declined in the recent years
12
1.5
10
8
1
6
4
0.5
0 0
04 05 06 07 08 09 10 11 12 13 14 15
Source: ECB.
13
Labour and product market rigidities contributed to the
non-sustainable real convergence process
Product market rigidities and Changes in ULC and
unemployment rate unemployment rate
20 20
EL EL
15
10 10
(2009-14)
(2009-14)
ES
ES
5 PT IT
5 IT PT SI
SI NL
NL BE
BE SK
0 IE AT FR
SK 0 FR IE
AT
FI
DE
DE
-5
-5 0 25 50 75 100
0.5 1 1.5 2 2.5
Change in unit labour costs (ULC)
Product market rigidities (2008) (2001-09)
Source: All indicators taken from Ameco except for the product market rigidity measure, which comes from the OECD.
14
Convergence to which frontier?
Indicator of
convergence
global
frontier?
EMU
frontier?
Minimum
requirements?
country A EMU
average
country B
country C
time
15
Insufficient real convergence: a problem?
16
How to strengthen efficient functioning of EMU?
Types of reforms
Increase sustainable
economic growth
Foster sustainable
real convergence
17
EMU policy priorities have evolved over time
Potential output
Adjustment mechanism
(supply side)
Minimum harmonisation
approach
Single Market (acquis
EMU in 1999 Limited emphasis communautaire)
Exceptions:(direct) taxation,
labour and social compact,
education, health
Macroeconomic Imbalance
Procedure (MIP)
Institutional Avoid excessive internal and
reforms in external imbalances Limited emphasis
EMU since Still allows for a variety of country-
2011 specific settings
Banking and Capital Market Union
18
Which policy priorities to make EMU work?
Potential output
Adjustment mechanism
(supply side)
19
Which governance for genuine EMU?
20