1. The state of economic convergence in the Eurozone: Two decades of monetary union and economic governance
- Author:
- Adriaan Schout
- Publication Date:
- 01-2023
- Content Type:
- Special Report
- Institution:
- Clingendael Netherlands Institute of International Relations
- Abstract:
- What is the state of economic convergence in the euro area? And will the redefinition of the Stability and Growth Pact result in a more effective policy for achieving convergence? A common currency, together with the four freedoms, was assumed to lead to economic convergence. This Clingendael Report reviews the state of convergence in the euro area by focusing on nominal, real and institutional convergence. Despite a range of policy initiatives and monitoring systems, convergence has not been achieved neither in terms of monetary and economic performance nor of the quality of governance at the national level. Despite some major successes in convergence, welfare has continued to diverge in some countries and differences in debt levels have increased up to the point of threatening the - economic and political - coherence of the euro area. Public spending also varies considerably while higher public spending does not ensure higher growth levels. The paradoxical situation has arisen in which countries that (drastically) reduced debt levels performed better in terms of growth and reduction in unemployment.
- Topic:
- Economics, Governance, European Union, Economic Growth, and Economic Stability
- Political Geography:
- Europe