Capability of Convergence as Imperative for Euro Area Persistence
The economy of Euro area member states struggles to overcome the recession that followed the most recent crisis. The crisis neither originated from the Euro area nor even from Europe as a whole. However, as it reached the Euro area, its impact turned out to be quite devastating. A majority of Euro area countries have since then recorded GDP at levels vastly lower than their potential suggests, in some cases even lower than the levels seen prior to the crisis. Countries of Southern Europe with their relatively poorer levels of development were most seriously affected – ironically, it was that group of countries which had hoped to quicken the rates of their development within the Euro area, expecting benefits to be enjoyed in the wake of adoption of the common currency. Economic tensions also resulted in aggravating political disputes. Voices were heard heralding the decline of the Euro area while the ranks of Euro-sceptical politicians and experts augmented, including economists previously in favour of the common currency. While the sheer number of Euro area member states keeps increasing, other EU countries, in particular larger ones, experience visibly shrinking enthusiasm for their accession. It seems that political arguments started prevailing over economic ones in their respective debates upon the accession. The Economic and Monetary Union – the entity we shortly refer to as the Euro area – is thus undergoing profound changes. Let us then consider some of these changes and their underlying conditions.
Mechanism of Convergence...
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