The dynamics of core and periphery in the European monetary union: A new approach

Despite numerous studies about core-periphery in monetary unions, few focus on their dynamics. This paper (i) presents new theory-based, continuous and dynamic measures of the probability a country being classified as core or periphery; (ii) estimates determinants changes this over time across countries; (iii) uses Phillips-Sul convergence panel framework to investigate behaviour periphery groups time. Our main results indicate that post-EMU decrease gap we document was mainly driven by adoption euro increasing competition (lower mark-ups).