Real exchange and interest rates may still fluctuate inside the EMU and give rise to changes in competitiveness. We find, in contrast to what is generally expected, no convergence in these variables after the introduction of the euro. On the contrary, a divergence is found that is extraordinary...

In a world with multinational companies (MNC's) changes such as those implied by the realization of EC's internal market will affect the locational choice made by geographically mobile MNC's. The reason is that the reduction of trade barriers within the EC puts non-EC members at a competitive...