One Size Fits Some: A Reassessment of EMU’s Core–periphery Framework

Marcus Wortmann () and Markus Stahl ()
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Marcus Wortmann: Georg-August-University Göttingen, Postal: Georg-August-University Göttingen, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany
Markus Stahl: Georg-August-University Göttingen, Postal: Georg-August-University Göttingen, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany

Journal of Economic Integration, 2016, vol. 31, issue 2, 377-413

Abstract: This study provides a new multivariate assessment of core–periphery structures within the European Union. By applying different cluster algorithms to the broad set of Macroeconomic Imbalance Procedure indicators, we detect a relatively stability-oriented and homogeneous group of European Union core countries that would be suitable for having a common currency. Unlike previous results, our analysis shows that countries such as the United Kingdom, Denmark, and Sweden would also fit well within such a hypothetical euro area. However, Greece, Ireland, Italy, Portugal, and Spain plus Cyprus and Croatia on the southern periphery, as well as most of the countries of the eastern enlargement are found to form very distinct clusters in terms of competitiveness, indebtedness, and economic performance. Our findings thus reveal that a single monetary policy can be appropriate only for some countries, even when measured using the official Macroeconomic Imbalance Procedure scoreboard specifically designed to monitor the smooth functioning of the Economic and Monetary Union.

Keywords: Economic and Monetary Union; Macroeconomic Imbalance Procedure; Economic Integration; Macroeconomic Disparities; Cluster Analysis (search for similar items in EconPapers)
JEL-codes: C38 F15 F45 O57 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0689

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