Shocks and Divergence Impacts on Regional Integration: The Euro Area Case

Abstract

This paper's purpose is to evaluate European Area integration strength after economic and political crises occurrence and the clear countries’ heterogeneity. We use optimal currency area theory contributions and gather various variables used generally to estimate regional integration in order to understand shocks and divergence real impacts on the area. Results show that shocks accentuate countries’ heterogeneity and therefore decrease the Euro area integration.

Keywords: integration, convergence, shocks, Optimal Currency Area, growth, governance, European Area.