Monitoring competitiveness in the European Economic and Monetary Union

The aim of the European Union's Macroeconomic Imbalance Procedure (MIP) is to prevent and correct macroeconomic imbalances before they get out of hand. The President's of the EU and Euro area institutions recommend in their report on "Completing Europe's Economic and Monetary Union" to strengthen this procedure. A euro area system of Competitiveness Authorities is recommended, which should "assess whether wages are evolving in line with productivity and compare with developments in other euro area countries and in the main comparable trading partners". Along these lines it is analysed in this Study how well MIP has worked in the past and how it could make a more effective contribution to preventing and correcting divergences in competitiveness.