The introduction of the euro in 1999, it was claimed, would narrow the economic differences between the member countries of the monetary union. Unemployment rates would converge, as would other important macroeconomic variables, such as unit labor costs, productivity, and fiscal deficits and government debt. Ultimately, the differences in wealth, measured in terms of income per capita, would diminish as well.
After the common currency’s first decade, however, increased divergence, rather than rapid convergence, has become the norm within the euro area, and tensions can be expected to increase further.
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See Also:
- Goldman: If Greece Is Handled Wrong, All Of Southern Europe Will Fall Like Dominos And 30% Of Euro GDP Would Be At Risk
- Swiss Take Emergency Action To Devalue Franc To Keep Pace With Plunging Euro
- Portugal Fails To Pass Austerity Budget, Prays To God It Can Access More Debt
From Project Syndicate