Much of the discussion about how to impose more convergence among member states of the eurozone has focused on what national governments should do to avoid divergent developments in a number of macroeconomic variables, e.g. competitiveness or current account imbalances. Without denying that national governments bear part of the responsibility, this paper finds that the role of governments has been over-emphasised and that conversely the role of the monetary authorities, in particular the European Central Bank, has been under-emphasised.
Paul De Grauwe is Professor of Economics at the University of Leuven and Senior Associate Research Fellow at CEPS.