EURO AREA: NEW TIMES, SAME CHALLENGES
Revista Economica, 2012, vol. Supplement, issue 1, 709-719
The Great Recession revealed the imperfect constitution of the Euro Area. The Maastricht nominal convergence criteria were not a promoter of real convergence: after 1999 several countries accumulated macroeconomic disequilibria, `supported? by the Great Moderation. This paper estimates the potential output and the structural deficits of Euro Area (12) member states, employing the Hodrick-Prescott filter. According to the results, potential output declined severely, while structural budget deficits reached record levels recently. The member countries face the same challenge as in the past decades: potential output recovery in a context of fiscal consolidation. However, the global macroeconomic context is different.
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