Is the Region of Visegrad Countries on the Track to the Euro Area? Recent Evidence from the Real Convergence Perspective

Abstract

After enlargement of the European Union and subsequently joining of a new member states to the euro area, the question of economic convergence attracted considerable research interest. This paper adopts three alternative concepts to examine the level and trend of convergence in the Visegrad countries (Czech Republic, Hungary, Poland, Slovakia). We concurrently estimate the β-convergence, σ-convergence and business cycle synchronization to find out whether all countries are on the way towards higher convergence with the euro area. The results suggest that convergence of all countries has been increasing. However, the recent acceleration of the convergence process is caused mainly by external shocks in the form of the financial crisis and following economic slowdowns. Hence, the current level of convergence in the Visegrad countries cannot be considered as fully adequate.