Scandinavian Working Papers in Business Administration
Working Paper Series,
Lund University, Institute of Economic Research
No 2001/8: Exchange-Rate and Interest-Rate Driven Competitive Advantages in the EMU
Niclas Andrén () and Lars Oxelheim ()
Additional contact information
Niclas Andrén: Department of Business Administration, School of Economics and Management, Lund University, Postal: Department of Business Administration, School of Economics and Management, Lund University, Box 7080, SE-220 07 Lund, Sweden
Lars Oxelheim: Department of Business Administration, School of Economics and Management, Lund University, Postal: Department of Business Administration, School of Economics and Management, Lund University, Box 7080, SE-220 07 Lund, Sweden
Abstract: Real exchange and interest rates may still fluctuate inside the EMU and give rise to changes in competitiveness. We find, in contrast to what is generally expected, no convergence in these variables after the introduction of the euro. On the contrary, a divergence is found that is extraordinary when compared to the preceding 40 years. The magnitude of the divergence should urge on a wave of restructuring in the EMU, conditioned upon adequate policy responses. the worst-case scenario involves a flight to structural support and protectionism, challenging the whole idea of the EMU.
Keywords: real exchange rates; real interest rates; EMU; competitive advantage; restructuring
23 pages, April 26, 2002
Full text files
2001-8.pdf
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