Research On Divergence Of Euro Area's Economic

The world economy situation of 2017 was overall good,driving the euro area's economy towards recovery.Even the Greek economy has regained its upward trend.These have largely eased the ecnomic crisis of 2016 that engulfed the continent,and the euro could regain its credibility and momentum,but the deep-seated problems the EU and the euro area facing have not been eradicated.Although the euro area has been running for almost 20 years,it has not been able to shake off doubts about its possible collapse.The collapse of the euro is mainly based on the imbalance of economic development in the euro area after several shocks,which was based mainly on the Operating mechanism of the unification of monetary policy and the independence of fiscal policy initially.Especially,the European debt crisis of 2009 exposed not only the flaws of the eurozone's operating mechanisms,but also the fragility of prosperity that had lasted for many years.The original goal of sharing prosperity has not been achieved by the establishment of a single currency area.On the contrary,after several shocks,the development gap between the member states has further widened.As the epitome of economic globalization and regional economic integration,the euro area's problems and countermeasures are of great significance to understand the current economic globalization.The current study on the imbalance of economic development in the euro area basically stops at the empirical study of the convergence of Member States' economy,while the impact of regional economic integration on the imbalance of economy development of member countries is less concerned.Based on the setbacks of economic globalization,this thesis analyzes the evolution of the economic development gap among the member countries in the euro area,and further explores the relationship between regional economic integration and economic development gap.Firstly,on the basis of clarification of related concepts,this thesis reviews the theories of the relationship between regional economic integration and the convergence(divergence)of economic growth,which mainly include neoclassical growth theory,Heckscher-Ohlin-Samuelson theorem,growth pole theory,industrial agglomeration effect,and center-periphery theory.According to the neoclassical growth theory,due to the diminishing marginal returns of the factors,the economic growth rate of the less developed countries is higher.In the long term,per capita output of countries will converge to the same level.From the perspective of international trade which based on the endowment advantage,the convergence mechanism of Heckscher-RussoSamuelson theorem considers that free trade will not only make the relative price and absolute price of products in two countries equal,but also the relative price and absolute price of factors,which make the per capita income of the trading countries equal.If the hypothesis that returns to scale is unchanged and marginal returns is diminishing in the neoclassical economic growth theory are not tenable,there may be industrial agglomeration and economic growth pole.In the center-periphery theory,technological progress and its mechanism of dissemination have different manifestations and different influences between the "center" and "periphery" countries.These two systems are bound to be asymmetrical,so that the benefits gained from the international division of labor and international trade are not equal between the "center" and "periphery" countries.According to the Mundell-Fleming model and the Balassa-Samuelson effect,the difference in inflation rates has an impact on the competitiveness of national products under the fixed exchange rate system.In country with low inflation rate,the real exchange rate depreciates,and the competitiveness of export sector increases.In country with high inflation rate,export competitiveness is weakened.Therefore,even in the currency area,the difference of inflation rates leads to the divergence of economic growth of member countries.Secondly,this thesis introduces the history of Euro and the economic divergence in the euro area.This paper analyzes the macroeconomic situation of the euro area since its establishment,and grasps the economic development process of the eurozone as a whole and its performance after several crises.This paper investigates the development of the euro area in terms of economic growth rate,government debt,fiscal deficit,labor productivity,manufacturing cost and inflation rate,and compares the macroeconomic situation of each member country,and focuses on the realization of the convergence standard stipulated in the Maastricht Treaty,and points out the differences.In order to further confirm the changes in the economic development gap of member countries,the convergence of economic growth of the 12 countries in the euro area is tested,which includes a test for the ?-convergence of the economic growth of the 12 countries in the euro area by using the coefficient of variation,a test for the absolute ? convergence by CIPS panel unit root test,a test for conditional ? convergence by CIPS?IPS?Fisher-ADF and Fisher—PP panel unit root tests,and a test for the effect of the conditional convergence of the regional economic integration by system GMM.Thirdly,this thesis conducts an empirical test on the factors that affect the divergence of the economic growth in the euro area.Based on the three levels of commodity market integration,factor market integration and monetary integration of the euro area,this paper verifies the effect of the different degree of integration by fixed effects panel model.The integration of commodity market is represented by intra-regional trade intensity.The integration of factor market is expressed by the intensity of foreign direct investment and labor cost.The integration of currency market is expressed by the bond yields under convergence criteria,inflation rate and real effective exchange rate.Forthly,this thesis looks forward to the process and prospect of euro area reform.Whether the integration of the euro area can move forward in the twists and turns attracts the attention of the world,not only relates to the future of the euro area and EU member countries,but also deeply affects the development of economic globalization and regional economic integration.Although there are many defects in the operating mechanism of the euro area,and its economic development has been repeatedly frustrated,the eurozone itself has been in the process of continuous improvement.The progress has been slow,but the pace of integration has not stopped.Whether the euro area can achieve the goal of sustained economic growth in the region depends on the promotion of the deep reform from the EU and its member states.Finally,this thesis summarizes the research contents and conclusions,and then puts forward some countermeasures and suggestions on the plight the current economic globalization and the regional economic integration are suffering.