Divergence and Asymmetric Shocks in the Euro Area

Authors:

Pages: 241-248
DOI: https://doi.org/10.54664/VLJY7760

Abstract:

Divergence in the Euro Area is objectively determined by the different socio-economic results achieved by individual Euro Area countries. This is due to the differentiated models of economic development, the specific impact of the debt crisis, and the significant structural socio-economic imbalances. An asymmetric shock exists when there is a difference with a negative sign between the deviation of the GDP growth rate of an individual euro area country and the trend of change of the growth rate of the monetary union as a whole. The purpose of this study is to show that Euro Area countries are at a different stage, relevant to their structural convergence, with a larger number of asymmetric shocks in countries that joined the Euro Area at a later stage. Those that joined the Euro Area later and those with high public debt levels are more susceptible to asymmetric shocks and lack the capacity to respond adequately to the latter.

Keywords:

Euro Area; divergence; asymmetric shocks; socio-economic convergence; fiscal space.

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