The Eurozone: Whatever happened to convergence?

Julian Gough

Published: June 2013

This article examines the degree of convergence of the economies of the eurozone since the start of the single currency in 1999. Convergence, both in nominal and real forms, is measured using the coefficient of variation of several economic variables. The results suggest that while there was some convergence on inflation up to 2007, there was no convergence on economic growth, total government debt, budget deficits, unemployment or GDP/head. The financial crisis and global recession of 2007 and 2008 exposed a fault line in so large and diverse a currency union, and this now threatens the long-term future of the euro.