REGIONAL CONVERGENCE IN THE EUROPEAN-MONETARY-UNION

This paper analyzes the effects of European Monetary Union (EMU) on re gional convergence. First, information is provided about the magnitude and the evolution of regional disparities. Subsequently, the relation between economic integration and long-run regional convergence is dis cussed. Third, regional convergence is shown to be dependent on flexib le regional adjustment to changing economic conditions. In the transit ion to and in the final stage of EMU, sufficient regional wage flexibi lity will be required to cope with adverse economic shocks. The last p art of the paper estimates the response of regional labor income to re gion-specific and national shocks.