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Does the Dispersion of Unit Labor Cost Dynamics in the EMU Imply Long-Run Divergence?: Results from a Comparison with the United States of America and Germany

Sebastian Dullien () and Ulrich Fritsche ()

No 674, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: Using unit labor cost (ULC) data from Euro area countries as well as US States and German Länder we investigate inflation convergence using different approaches, namely panel unit root tests, co-integration tests and error-correction models. All in all we cannot reject convergence of ULC growth in EMU, however, country-specific deviations from the rest of the currency union are more pronounced in Europe and more persistent. This holds before and after the introduction of the common currency.

Keywords: Unit labor costs; inflation; EMU; convergence; panel unit root tests; convergence clubs (search for similar items in EconPapers)
JEL-codes: E31 O47 C32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
Date: 2007
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Working Paper: Does the Dispersion of Unit Labor Cost Dynamics in the EMU Imply Long-run Divergence? Results from a Comparison with the United States of America and Germany (2007) Downloads
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