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What is Endogenous Convergence

In the context of EMU, refers to convergence that occurs as a result of being part of the monetary union. For example, a monetary union may lead to a higher trade between countries than if they had retained separate currencies. Trade increases the extent to which economic conditions in one country or region affects its trading partners, and as a result will tend to increase the convergence of their business cycles.

Crown Copyright. Material taken from HM-Treasury. Reproduced under the terms and conditions of the Click-Use Licence.

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Term created / updated 2007-03-20 22:48:50

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