External constraints and EMU

Real Convergence and Convergence in the Transition to the Economic and Monetary Union. However, it underlies the monetary crisis in Europe and makes the achievement of EMU doubtful. Looking at real convergence, one can assess whether or not to exchange nominal exchange rates. One can also look into a potential growth in a monetary union. The means of real convergence are supply-side factors. They combine price and non-price competitiveness. In this paper I study the factors of competitiveness theoretically and empirically to estimate the strengths and weaknesses of the five main countries in the Community. Structural differences between the above-mentioned countries remain substantial. Only France and Germany seem capable of sustaining the competition in the single market without the help of a depreciating trend in their real exchange rates. Other countries have experienced nominal valuations since September 1992 which are consistent with required real depreciations