DETECTING TRENDS OF CONVERGENCE AMONG THE EUROZONE COUNTRIES IN TERMS OF ECONOMIC FREEDOM

Year 2017, Volume: 9 Issue: 1, 33 - 47, 01.02.2017

Dimitris Kallioras Georgia Gkotinakou Markos Farda

Abstract

The present paper adopts a broad perspective of the Optimum Currency Area
theory, and attempts to detect trends of convergence in terms of economic
freedom among the Eurozone countries. The empirical analysis utilizes the Index
of Economic Freedom and employs the methodological approaches of
unconditional β-convergence and convergence clubs. The results indicate that the
trend revealed for the period 2001-2017 is, in fact, the balance between the
opposite trends revealed for the sub-periods 2001-2008 and 2008-2017.
Particularly, during the sub-period 2008-2017 the trend of convergence vanishes
and the trend of divergence becomes stronger.

Keywords

Eurozone countries, Optimum Currency Area theory, Index of Economic Freedom, unconditional β-convergence, convergence clubs