The dynamics of core and periphery in the European monetary union: A new approach

•We offer a new (continuous and dynamic) approach to study core-periphery in the EMU.•We provide novel results for a set of European countries using yearly data from 1960.•We use OCA theory to unveil the main explanatory factors of these dynamics.•We find the emergence a newer core, an intermediate...

Full description

Saved in:
Bibliographic Details
Published in:Journal of international money and finance 2021-04, Vol.112, p.102325, Article 102325
Main Authors: Campos, Nauro F., Macchiarelli, Corrado
Format: Article
Language:English
Subjects:
Competition
Convergence
Core-periphery
Euro
Symmetry
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:•We offer a new (continuous and dynamic) approach to study core-periphery in the EMU.•We provide novel results for a set of European countries using yearly data from 1960.•We use OCA theory to unveil the main explanatory factors of these dynamics.•We find the emergence a newer core, an intermediate and a periphery set of countries.•Euro membership and competition make countries more likely to be in the core. Despite numerous studies about core-periphery in monetary unions, few focus on their dynamics. This paper (i) presents new theory-based, continuous and dynamic measures of the probability of a country being classified as core or periphery; (ii) estimates the determinants of the changes in this probability over time and across countries; and (iii) uses the Phillips-Sul convergence panel framework to investigate the behaviour of core and periphery groups over time. Our main results indicate that the post-EMU decrease of the core-periphery gap that we document was mainly driven by the adoption of the euro and by increasing competition (lower mark-ups).
ISSN:0261-5606
1873-0639
DOI:10.1016/j.jimonfin.2020.102325