This paper analyses how adjustment dynamics, in an environment with some degree of price and wage rigidity, may create and strengthen asymmetric developments in a monetary union. It presents a simple illustrative model of adjustment dynamics that reproduces quite nicely actual developments in...

Large and economically diverse countries often face a problem of regional imbalances which goes beyond a simple division between a core and a periphery. In large countries regions "out of the core" demonstrate substantial variety in economic, social and cultural terms, they have difference...