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Using a large panel for 95 countries and the 1972–2014 period, this paper analyses the interactions among globalization, political & civil rights and economic convergence, through a simultaneous estimation technique. We use a multi-dimensional, de facto, and continuous measures of Freedoms and Globalization. We find a two-way positive relationship between civil liberties & political rights and economic, political and social Globalization, as well as significant two-way relationships with the economic convergence (using as a proxy the ratio of GDP per capita to the US). In this way, we extend the test for the two-way relationship between Democracy and Globalization put forward by Eichengreen and Leblang (Econ Politics 20(3):289–334, 2008). Overall, we also find a virtuous cycle between Globalization, Freedoms and Economic convergence, except for non-OECD countries at early intermediate stages of development. This positive systemic effect can be put into question by the recent negative shocks on Globalization and Freedoms related to the Covid-19 pandemic. [ABSTRACT FROM AUTHOR]

This paper uses a transformation of the period-by-period index proposed by Cerqueira and Martins (), to overcome some of its shortcomings, in a non-parametric estimation to analyze how business cycle synchronization for a sample of 111 countries evolved in the period 1960-2007. The period-by-period index is able to distinguish between negative correlations due to episodes in single years, asynchronous behavior in turbulent times and synchronous behavior over stable periods and the non-parametric approach provides a more detailed analysis than the use of a parametric approach. The results show that since the nineties the synchronization at the world level, within and between country groups, experienced a dramatic increase reaching the highest values ever at the sample end. [ABSTRACT FROM AUTHOR]

This paper demonstrates effects of economic convergence processes on the foreign exchange behaviour in a monetary modelling approach. Since the exchange rate represents the relative price of two currencies, commonness of stochastic trends between the fundamental determinants of supply and demand of the underlying monies restricts exchange rate movements to transitory fluctuations. In the spirit of optimal currency areas, this has the potential to serve as a criterion for an all-round integration of two economies. Empirically, such a constellation is found between Australia and New Zealand, whereas diverging trends in money and interest rates characterise the relation of Australia towards the US. [ABSTRACT FROM AUTHOR]

This paper makes three contributions. First we present a technique by which the monetary transmission mechanism of Germany, France, the UK and the Eurozone can be decomposed into its component cycles, compared across economies and across time. As a result, we found that the individual data generating processes have varied over time. Second we show that Germany has now converged on the rest of Europe and not vice versa, although Germany had dominated monetary policy making in Europe for many years. Third, we show that the UK as an outsider has behaved like a peripheral EMU country, even when EMU was not in place. In other words, the transmission mechanisms of Germany and the UK were fundamentally different. Hence, when that German monetary policy dominated Europe in a way that was not in line with the rest of Europe, never mind the UK, it is no surprise that the UK eventually left the ERM (1992). The current financial crisis may enforce the trend of convergence of the transmission mechanism. But there have been signs of a divergence between core and periphery, to some extent involving the UK, so this general convergence, as opposed to tighter convergence in the core, may not last. [ABSTRACT FROM AUTHOR]

This paper analyses the process of nominal and real convergence in the new Member States of the European Union (NMS). The importance of nominal and real convergence is underlined in connection with a successful catching-up. The NMS economies experienced robust economic growth in recent years, which had a positive impact on the convergence process. Although this favourable development of real convergence is accompanied by a simultaneous price (nominal) convergence, the comparative price level is still biased towards lower level in comparison with the per capita income. The regression analysis shows interdependence between the comparative price and the income per capita level. This basis enables to evaluate potential benefits and risks connected with joining the euro. The benefits connected with elimination of exchange rate risks and reduction of transaction costs can be compared with the disadvantages associated with the loss of an independent monetary policy and an adjusting exchange rate mechanism. Attention is paid to a potential impact on nominal and real convergence of the observed countries. There are some risks for these countries connected with the common monetary policy, which is adjusted more to the conditions of stabilized advanced economies, forming the core of the Eurozone. These risks can be overcome on the basis of a fast labour productivity growth, accompanied by an adequate policy, ensuring the macroeconomic stability. The rapid productivity growth is raising the relative price level. The Maastricht dilemma, i.e. the fulfilment of two objectives during the stay in ERM II (the price stability and the exchange rate volatility) under on-going nominal convergence enforces an appropriate monetary and fiscal policy. However, such strict policies may slow down the economic growth. Another possible measure for keeping the price stability is a relaxation of the fluctuation band (its full exploitation to the upper and bottom limits), or a change of the central parity (revaluation). [ABSTRACT FROM AUTHOR]

The dating of a possible European business cycle has been inconclusive. At this stage, there is no consensus on the existence of such a cycle, or of its periodicity and amplitude, or of the relationship of individual member countries to that cycle. Yet convergence to a common cycle is the key consideration for a successful economic performance in any currency union. The confusion over whether and to what degree the Eurozone countries are converging on a common cycle is one example of this lack of consensus. In general, countries may vary in the components and characteristics that make up their output cycles; and also in their position around the output cycle at each point of time. In this paper we show how to decompose a business cycle into a time–frequency framework. This then allows us to decompose movements in output, at the European level and in member countries, into the component cycles and permits us to see how those component cycles (and the coherence between them) have varied in importance and cyclical characteristics over time. That in turn allows us to determine if the inconclusive convergence results obtained in the past have appeared because member countries have some cycles in common—but diverge at other cycles as a result of the asymmetric transmission of shocks, or external factors, or country specific shocks. [ABSTRACT FROM AUTHOR]

The authors reflect on the two policy issues in the Eurozone, the cyclic convergence and fiscal sustainability. They also exhaust the issue of unqualified single monetary policy for the whole Eurozone with regards to cyclical convergence. Further, they present and discuss 11 selected papers that was dedicated to examine the particular problems that arose since the introduction of the single monetary policy.

This paper focuses on the contribution of dynamic technological specialization to aggregated growth and convergence. Certain theoretical approaches (Structuralism) maintain the view that being specialized in 'correct' technologies helps to achieve: i) sustainable rhythms of long-run growth; ii) accelerated catching up and higher rhythms of convergence in delayed countries. Using an endogenous growth model for a 23 countries sample between 1980 and 2010, the work contrasts those hypotheses by using static and dynamic approaches for technological specialization in comparison to other technological variables. Empirical results do not confirm that any 'good' specialization matters to growth and convergence at an aggregated level, neither under static nor dynamic approaches. The key elements to aggregated convergence and growth are more linked to spillovers of technological diffusion and to country-specificities (technological capabilities and capacities, domestic technical efforts, national innovation systems, industrial innovation processes, etc.) as it is pointed out by catching-up theories. [ABSTRACT FROM AUTHOR]

The success of the integration process of the new EU Member States is reflected by the convergence performance. Sustainable convergence assumes that potential growth rates of the less developed countries continuously exceed the dynamics of the potential output of the developed countries. However, the financial and economic crisis of 2008 has resulted in a fundamentally new situation as regards these issues. This paper considers real convergence, catch-up processes and in terms of these the main economic growth trends. The study focuses mainly on the potential growth trends. The recession has, however, affected the individual countries to different degrees. The study classified the Member States into four groups based on the initial circumstances and the vulnerability originating from them; these are 'Developed' countries and 'Convergence' countries, three groups of the latter are 'Mediterranean' countries, 'Catch-up' countries and 'Vulnerable' countries. Potential growth and the contribution of the individual growth factors might follow significantly different paths in these country groups. The convergence countries might face especially great challenges. Potential growth rate of the 'Convergence' countries-according to simulations-is expected to recover less in the mid-term, than that of the 'Developed' countries, i.e. convergence slows down, it might come to a halt or even divergence might occur in certain countries. It might result in a 'Convergence Crisis' particularly in certain 'Mediterranean' and 'Vulnerable' new Member States. Also, longer term simulations indicate that the European convergence processes might slow down and stop in certain countries. These trends may have significant effects on economic policies facilitating potential growth. We apply extensive quantitative analysis, production function and growth accounting approaches in the study. [ABSTRACT FROM AUTHOR]

This paper tests the hypothesis that the economic relationships between China and her major trading partners have changed over the past 20 years with the industrialisation of China, and the emergence of Japan as a source of investment and network trade in sophisticated manufactures, and the US as a source of finance and investment assets, supplier of services and an apparently inexhaustible demand for consumer and intermediate goods. Has this changed the size and direction of spillovers in the region, and has it curtailed or eliminated American economic leadership? We use time-varying spectral methods to decompose the links between the two leading Asian economies and the US. We find: (a) the links with the US have been weakening, while those based on China have strengthened; (b) that this is not new—it has been happening since the 1980s, but has now been reversed by the surge in trade; (c) that the links with the US have been rather complex, with the US able to shape the cycles elsewhere through her control of monetary conditions, but the China zone able to control the size of their cycles; (d) that Japan remains linked to (and dependent on) the US; and (e) there is no evidence that pegged exchange rates encourage convergence. [ABSTRACT FROM AUTHOR]

An introduction to the journal is presented in which the editor discusses various reports published within the issue including one by Adam Koronowski on the divergent business cycles in the Euro area, another by Hughes Hallett and Richter on the transitions in the economic relationships in Asia, and the nominal and real convergence in the new Member States of the European Union (NMS) by Žd' árek.

This paper analyzes deviations from uncovered interest rate parity which are interpreted as indicator of the substitutability of currencies. Backward recursive statistical tests and error correction models are applied to study the co-movement of interest rates, and rolling regressions are used to study size and volatility of country specific risk premiums. In accordance to their degree of monetary integration with the Euro area, new EU members and accession countries are divided into three groups. Estonia and Lithuania seem to exhibit the highest degree of monetary integration with the Euro area. [ABSTRACT FROM AUTHOR]

A sustainable long-run pattern in the relative competitiveness of Euro area countries is a key factor for the survival of the monetary union. We analyse the issue focussing on unit labour cost dynamics using cointegration analysis for the whole economy and for the manufacturing sector separately. Our findings show that the introduction of the Euro has increased, rather than decreased, the distance among member countries, as measured in the metric of unit labour costs. Dispersion of productivity rather than wage compensation suggests that persisting idiosyncratic dynamics are driven by real factors, i.e. diverging technological patterns rather than by monetary factors, expressed by wage compensation. [ABSTRACT FROM AUTHOR]

This article examines the price dispersion in the European Union (EU) over 15 years (1990–2005). An extensive overview of the literature offers inconclusive results with the half-lives of price shocks from 2.8 to 282 months. Until now, most of the empirical research has been either micro or macro based. In contrast, we conducted a complex analysis utilizing both aggregate and disaggregate price data. The macro approach is based on a Comparative Price Level index calculated as the ratio between PPPs and exchange rate. The disaggregate analysis utilizes the actual prices of almost 150 individual products sold in the 15 capital cities of the EU. We conducted sigma and beta convergence in the analysis of both datasets. There are several differences in results depending on whether the calculation was based on indices or actual prices. Additionally, the model is tested to measure the contribution of different factors in explaining the observed convergence pattern. Most of the explanatory power comes from the differences in GDP (or wages), exchange rate volatility and differences in taxes. The Euro effect when controlling for exchange rate volatility, is not significant. [ABSTRACT FROM AUTHOR]

The dichotomy of the increasing diversity of eurozone member countries and the institutional 'one-size-fits-all' setting has exposed the deficiencies of the institutional economic architecture of the eurozone in the financial and economic crisis of 2008-2010. It has particularly exposed the weaknesses of middle-income countries within this framework. Greece, Ireland, and Portugal are experiencing outright financial crises. This article's thesis is that small middle-income countries (MICs) in the eurozone face two general macroeconomic problems: (1) there is inherent macroeconomic instability; and (2) there is a problem of 'competitiveness and convergence.' Small MICs' ability to grow and catch up is demand-based and largely export-driven. Price competitiveness is an important factor of competitive growth within the eurozone. A national fiscal policy is crucial to countries' ability to form and implement national policies for economic stability and competitive growth, which would enable a durable, above-average growth rate. Calls for a fiscal union along with the monetary union may therefore backfire. [ABSTRACT FROM AUTHOR]