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The euro and price convergence: You wanted it…you got it!

By November 29, 2013No Comments | November 29, 2013

Remember some of the objectives of the creation of the euro? A single currency area within Europe would carry with it:

  • Enhanced factor mobility
  • Greater productivity growth
  • Acceleration of financial development; and
  • Improved macroeconomic policies.

Or, at least, that was the hope (Wyplosz 1997).

Newspaper headlines these days make it all too clear that the Eurozone has so far defaulted on these promises. In a recent paper, however, we highlight one area in which it appears to be working precisely as intended – integrating consumer markets and bringing about price convergence (Cavallo et al. 2013).


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