Monetary Policy and Competitiveness in the Euro Area

The paper deals with convergence problems encountered by peripheral countries of Europe during the EMS and then anticipates the new macroeconomic environment which will establish at the inception of the European Monetary Union. The analytical model devised in the paper allows a deeper understanding of the much more difficult task facing the countries of Peripheral Europe, asa restrictive common monetary policy could impose a deflationary bias on economies at a lower level of productivity with respect to the Core Europe.