The<scp>E</scp>uro<scp>P</scp>lus<scp>P</scp>act: Competitiveness and External Capital Flows in the<scp>EU</scp>Countries

Gabrisch, Hubert; Stæhr, Karsten

doi:10.1111/jcms.12220

Cited by 60 publications

(45 citation statements)

References 47 publications

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“…In other words, the evidence in support of the competitiveness thesis is overlooking a key variable: the presence of an aggressive policy aimed at suppressing consumption -a policy predicated on the competitiveness thesis itself! This is consistent with studies that find a competitiveness-imbalance link but suggest that the causality is backwards (Gabrisch and Staehr 2015).…”

Section: The Market For Financial Products In Actionsupporting

confidence: 91%

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Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances

Fuller

2017

New Political Economy

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European Economic and Monetary Union has fostered an unstable complementarity in European financial markets between the growth models favoured by European savers (in the northern 'core' of Germany and other exporting states) and its borrowers (in the debt-fuelled and demand-driven eurozone periphery, including countries like Greece and Ireland). In the 2000s, the result of this development was a sharp decrease in real interest rates across the eurozone periphery, leading to rapid but inflationary growth. This eroded the competitiveness of exporters in the European periphery, making them more reliant on capital inflows to pay for growing current account deficits. Those deficits became problematic after the disruption of eurozone financial markets beginning in 2008. The policy response to the crises has focused on reducing the competitiveness gap between the core and periphery -while overlooking the financial forces that contributed to those competitiveness differentials in the first place. Indeed, it is the fragile and perverse complementarity in eurozone financial markets -more than any external shock or competitiveness differences -that lies at the root of Europe's ongoing crisis. As prospective eurozone members prepared to irrevocably fix their exchange rates in the late 1990s, Milton Friedman (1997) took to the op-ed pages to rain on their parade. Sounding a note of scepticism about European economic and monetary union (EMU), he argued that: [The euro] would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange-rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavourable conditions will prove a barrier to the achievement of political unity.Friedman's chief concern, shared with many -particularly US-trained -economists, was rooted in Robert Mundell's notion of optimal currency areas (OCAs). In the world of OCA theory, the euro looked like a dubious proposition: because eurozone members were so economically distinct, shocks to the currency area would inevitably affect the various parts of the zone differently. Member states, robbed of exchange rate flexibility and their own monetary tools, also lacked bloclevel adjustment tools -such as easy intra-European migration or a federal government willing to transfer funds around the bloc. As a result, the critics argued, national governments would come to resent EMU as a policy straightjacket (Jonung and Drea 2009).

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Section: The Market For Financial Products In Actionsupporting

confidence: 91%

“…France's Jean-Luc Mélenchon has described Germany as 'a danger', imperialistically seeking expansion and the imposition of its economic will (Nougayrède 2017). Antiausterity protests sometimes feature signs associating Angela Merkel with Nazi imagery (Gouliamaki 2012).…”

Section: Concluding Thoughtsmentioning

confidence: 99%

Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances

Fuller

2017

New Political Economy

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“…The purpose of this paper is to discuss these questions, focusing on the area of fiscal policies. The paper found its inspiration in, among others, papers by Aiginger (2013), Gabrisch and Staehr (2014), Rozmahel, Grochová and Litzman (2014), and van Aarle (2013). Furthermore, this paper builds on the final thesis of Rozmahel, Kouba, Grochová and Najman (2013): "Instead of harmonization, we call for better coordination and joint responsibility in the fiscal area, and more generally in terms of policies and institutions in the European Union."…”

Section: Introductionmentioning

confidence: 95%

Policy Autonomy, Coordination or Harmonization in the Persistently Heterogeneous European Union?

Kouba

Mádr

Nerudová

et al. 2016

DANUBE: Law and Economics Review

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Within the context of the continuing integration process in Europe, this paper addresses the question of whether policies in the EU should head towards autonomy, coordination or harmonization. Taking the path dependence effect into account, it is the authors' opinion that Europe has gone too far in its integration process to be able to continue with policies being fully under the competences of individual member countries. However, the habitual question still arises: does fiscal policy need to be harmonized to a level comparable to monetary policy as these two policies, necessarily, complement each other? This paper argues that it does not. There are three main arguments discussed. Firstly, the authors build on the theory of fiscal federalism. Secondly, there are significantly different regimes of welfare states and extents of social policies among European countries, which strongly determine the character of public finance. And thirdly, the tax systems across Europe are also highly divergent, with many features of continuing tax competition.

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“…In the wake of the crisis, supra-national Keynesian economic stimulus packages could not be implemented, as a common fiscal authority in the EMU does not exist. In addition, in most EMU member states general government debt levels had grown above the Maastricht limit of 60% of GDP, what constituted an important impediment for anti-cyclical spending (Gabrisch and Staehr 2014). Only in 2014 a pan-EU investment program was launched with a size of 315 billion euros, which was mainly based on a sophisticated leveraging scheme (European Commission 2015).…”

Section: Fiscal Policies As Regional Stabilization Toolsmentioning

confidence: 99%

Regional heterogeneity, the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU

Fischer

Schnabl

2017

Int Econ Econ Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Both Japan and parts of the European Monetary Union have experienced boom and bust in stock and real estate markets, which have been followed by a lasting crisis. The paper analyses the role of a high degree of regional heterogeneity for public debt and monetary policy in the context of crisis. It is shown for Japan that the attempts to maintain regional cohesion via a regional transfer mechanism has contributed to the unprecedented rise in public debt and persistent monetary expansion. Econometric estimations show that in Japan regional redistribution of funds has ensured homogeneous living conditions across Japanese regions preand post-crisis. The side condition is monetary expansion. A similar effect could emerge in Europe, if the crisis persists. Terms of use: Documents inJEL-Codes: H120, H770, E520.

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TheEuroPlusPact: Competitiveness and External Capital Flows in theEUCountries

Cited by 60 publications

References 47 publications

Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances

Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances

Policy Autonomy, Coordination or Harmonization in the Persistently Heterogeneous European Union?

Regional heterogeneity, the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU

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