Is more competition conducive to the macroeconomic performance in the euro area?

Abstract

Panel estimation, Mark-up, Labour market institutions, Euro area, E24, J31, J51,

Monetary Discipline as a Substitute for Fiscal Reforms and Market Liberalisations

“…Thus, an incumbent government facing potential electoral costs is likely to develop a timid attitude toward market rigidities. This is consistent with evidence in Conway et al (2005), Buti et al (2010, and Weyerstrass and Jaenicke (2011): southern EMU countries which started with highly regulated product markets before 1998, notwithstanding some progress in specific sectors 12 , still remained highly regulated in 2003 and thereafter.…”

“…(), Buti et al . (), and Weyerstrass and Jaenicke (): southern EMU countries which started with highly regulated product markets before 1998, notwithstanding some progress in specific sectors , still remained highly regulated in 2003 and thereafter.…”

“…On the other hand, Conway et al . (), and Weyerstrass and Jaenicke () show that southern EU countries like Greece, Italy, Portugal and Spain exhibited a relatively high level of product market regulation both before and after EMU inception, due to the political costs of liberalisations: see Buti et al . ()…”

“…As for fiscal policy, Fatàs and Mihov (2010) argue that, notwithstanding the adoption of the Stability and Growth Pact, the introduction of the Euro has not led to a significant change in fiscal policy behaviour in the Euro area; see also IMF (2004). According to Perotti (2010), after several years of 'fatigue' due to budget cuts aimed at qualifying for the EMU, many governments relaxed their discretionary fiscal policy in 2000-2001. On the other hand, Conway et al (2005), and Weyerstrass and Jaenicke (2011) show that southern EU countries like Greece, Italy, Portugal and Spain exhibited a relatively high level of product market regulation both before and after EMU inception, due to the political costs of liberalisations: see Buti et al (2010). 3 In what follows we draw on previous work to focus on reform selection.…”

Reinforcing Each Other: How the Combination of European and Domestic Reforms Increased Competition in Liberalized Industries

“…European economies, previously characterized by low levels of competition (Alesina and Giavazzi, 2008), have undergone a significant transformation. Industries have witnessed a decrease in concentration (Kalemli-Ozcan et al, 2015;Gutierrez and Philippon, 2023;Philippon, 2019), and powerful incumbents have experienced a decline in their market power (Badinger, 2007;Holland, 2009;Weyerstrass and Jaenicke, 2011). Philippon (2019) argues that the magnitude of the increase in competition has been so significant that he refers to it as a ''Great Reversal''.…”