it suggests that the differentials originate from the fact that adjustment mechanisms in the euro area are not functioning as smoothly as they might and that policies other than monetary policy are not consistent with inflation rates close to the euro area average. thus, other factors are contributing to the inflation differentials within the euro area, including misaligned fiscal policies, wage dynamics not linked to productivity developments ( something reflected in the significantly different rates of growth in unit labour costs across the union ), and structural inefficiencies such as rigidities in product and factor markets. persistent differentials that result from these factors lead to a loss in competitiveness and cannot be considered benign. figure 8 indicates a strong positive relationship between average inflation rates in different euro area economies and the average growth of unit labour costs over the period since monetary union began. figure 8 : cumulative deviation of inflation and ulcs relative to euro area average ( 1999 - 2006, in percentage points ) - 5 - 10 - 15 be de ie gr es fr it inflation lu nl at pt fi ulcs source : bis database figure 9 : dispersion of real gdp growth rates within euro area ( 13 countries ), us ( 50 states and d. columbia ) and us ( 8 regions ) ( unweighted standard deviation in percentages ) 5. 00 ea13 4. 50 us50 us8 4. 00 3. 50 3. 00 2. 50 2. 00 1. 50 1. 00 0. 50 0. 00 source : us bureau of economic analysis and eu ameco database it is important to note that the process of nominal convergence from the early 1990s onwards, which culminated in the adoption of the euro, was not accompanied by a greater dispersion of real gdp growth rates. nor has dispersion increased following the adoption of the single currency. if any trend is discernable, it is a slight downward one, with dispersion remaining close to its historical average of around 2 percentage points, which is no greater than that found in the us. moreover, inflation and growth across the euro area appear to move together. those countries with higher than average inflation rates ( ireland, greece, spain, for example ) appear to have higher growth rates. this suggests that, to the extent that inflation differentials do not reflect differences in growth rates of productivity, the dampening effect of loss in competitiveness has been offset by other factors, such as interest rate decreases in the period up to the adoption of the euro, inflow

. 5 hicp excluding unprocessed food and energy 4. 5 4. 0 mro rate 4. 0 3. 5 3. 0 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 ja n ju 98 l1 ja 98 n ju 99 l1 ja 99 n ju 00 l2 ja 0 0 n ju 01 l2 ja 01 n ju 02 l2 ja 02 n ju 03 l2 ja 03 n ju 04 l2 ja 04 n ju 05 l2 ja 05 n ju 06 l2 ja 06 n ju 07 l2 3. 5 source : ecb by maintaining low inflation and securing long - term inflation expectations at levels consistent with price stability, the ecb makes its best possible contribution to supporting sustained economic growth and employment creation. the stability - oriented policies have supported both households, by maintaining the purchasing power of their income and savings, and the business sector, by creating an environment of low and stable interest rates, conducive to investment. figure 2 : indicators of long - term inflation expectations in the euro area ( january 1999 - september 2007 ) ( monthly averages ) 3. 0 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 france ( 2013 maturity ) ( 1, 2 ) euro area ( 2012 maturity ) ( 1, 3 ) euro area ( 2015 maturity ) ( 1, 3 ) 0. 5 spf consensus economics 0. 5 0. 0 0. 0 jan jul jan jul jan jul jan jul jan jul jan jul jan jul jan jul jan jul 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 notes to figure 2 : ( 1 ) the ten - year break - even inflation rate reflects the average value of inflation expectations over the maturity of the index - linked bond. it is calculated as the difference between the nominal yield on a standard bond and the real yield on an inflation index - linked bond, issued by the same issuer and with similar maturity. ( 2 ) issued by the french government linked to the french cpi excluding tobacco. ( 3 ) issued by the french government linked to the euro area hicp excluding tobacco. ( 4 ) survey of professional forecasters conducted by the ecb on different variables at different horizons. participants are experts affiliated with institutions based with the european union