Does the dispersion of unit labor cost dynamics in the EMU imply long-run divergence? : results from a comparison with the United States of America and Germany

Sebastian Dullien; Ulrich Fritsche

Using unit labor cost (ULC) data from Euro area countries as well as US States and German Länder we investigate inflation convergence using different approaches, namely panel unit root tests, cointegration tests and error-correction models. All in all we cannot reject convergence of ULC growth in EMU, however, country-specific deviations from the rest of the currency union are more pronounced in Europe and more persistent. This holds before and after the introduction of the common currency.

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Year of publication:	2007
Authors:	Dullien, Sebastian ; Fritsche, Ulrich
Publisher:	Hamburg : Dep. Economics and Politics, Univ.
Subject:	Unit labor costs \| EMU \| convergence \| panel unit root tests \| convergence clubs \| Eurozone \| Euro area \| USA \| United States \| Deutschland \| Germany \| EU-Staaten \| EU countries \| Lohnstückkosten \| Unit labour cost \| Vergleich \| Comparison \| Einheitswurzeltest \| Unit root test \| Wirtschaftliche Konvergenz \| Economic convergence \| Inflationskonvergenz \| Inflation convergence \| Inflationsrate \| Inflation rate \| Arbeitskosten \| Labour costs