Euro Area Structural Convergence? A Multi-Criterion Cluster Analysis
26 Pages Posted: 4 Jan 2014
Date Written: January 2014
This paper proposes a classification of the old member countries of the euro area in a structural data rich environment and run a convergence analysis using the same framework. First, we use a clustering approach and identify two structurally distinct groups of countries that are not modified between 1995 and 2007: the South Countries Group (SCG) – composed of Greece, Italy, Portugal and Spain – and the Other Countries Group (OCG). Second, we propose a convergence metrics and reach three key findings: (i) increase over time of the between-group dispersion; (ii) diverging demographics and innovation performance into the OCG, and (iii) an unfortunate convergence towards high labour market duality in the SCG.
Keywords: Cluster Analysis, European Monetary Union, Structural Policies
JEL Classification: C38, E02, F33
Suggested Citation: Suggested Citation