How to Deal with Economic Divergences in EMU?
Résumé
Since the launch of the euro, persistent and even rising disparities among Member States have
made it difficult to implement short-term or structural common economic policies. The article
gives an overview of euro area disparities in terms of growth and inflation and imbalances,
mainly unemployment and current accounts. Four explanations are considered: the benefits of
the single currency for catching-up countries, the weaknesses of the euro area economic
policy framework; the implementation of non-cooperative domestic policies which have
induced excessive competition and insufficient coordination and hurt mainly the larger
economies; the crisis of the European Continental model in a global world. Four strategies are
discussed: increasing market flexibility; moving towards the knowledge society of the Lisbon
Agenda; re-nationalising economic policies; introducing a more growth-oriented policy
framework.