M y third reason for why real convergence matters is related to the second point: just as institutional quality matters for monetary policy and closing income level gaps, so do integration and risk-sharing. Deeper integration will help smooth consumption through asymmetric shocks, rather than amplifying those shocks, and will support the process of real convergence.
For example, labour mobility between countries is low and, as we have seen in recent years, is unlikely to be a major source of adjustment once a crisis hits. Although there was an increase in labour mobility in crisis-hit countries, the overall adjustment was limited. Similarly, financial integration has come to a halt.