Understanding the Political Economy of the Eurozone Crisis

Frieden, Jeffry; Walter, Stefanie

doi:10.1146/annurev-polisci-051215-023101

Cited by 150 publications

(124 citation statements)

References 77 publications

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“…The controversy over the EMU so far has mostly focussed on which countries gain and which countries loose. This has left underexposed that the EMU may serve certain interest groups better than others also at the national level, in particular in creditor states (Streeck, 2014;Frieden and Walter, 2017). Using a mechanistic research design, I showed for Western Germany that during the years between its introduction and the financial crisis the costs and benefits of the Euro were indeed distributed unequally across industries.…”

Section: Resultsmentioning

confidence: 99%

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993–2008

Ochsenfeld

2017

Socio-Economic Review

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The current debate over distributional implications of the crisis-ridden Economic and Monetary Union (EMU) is heavily biased towards international accounts. Little attention is paid to who wins and who loses out intranationally. I argue that in Germany the EMU has reinforced dualization, the insider-outsider cleavage in the country's welfare state and production model. To scrutinize this argument, I analyze longitudinal linked employeremployee data (N>9.6 mio) and pursue a mechanistic three-step identification strategy: First, I illustrate how the introduction of the Euro distorted real interest and exchange rates within the Eurozone. Second, I demonstrate how these imbalances redistributed rents from the domestic sector, in particular from construction, to the core manufacturing industry. Third, I show how this shift in industry rents reverberated to the wage distribution and increased inequality. The study contributes to resolve the puzzle why wage inequality in Germany increased through a fanning out of the wage distribution whereas countries similarly exposed to technological change and globalization grew unequal through a polarization of their wage distribution.

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Section: Resultsmentioning

confidence: 99%

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993–2008

Ochsenfeld

2017

Socio-Economic Review

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“…This has left underexposed that the EMU may serve certain interest groups better than others also at the national level, in particular in creditor states (Streeck, 2014;Frieden and Walter, 2017). Using a mechanistic research design, I showed for Western…”

Section: Resultsmentioning

confidence: 99%

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993-2008

Ochsenfeld¹

2017

Preprint

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The current debate over distributional implications of the crisis-ridden Economic and Monetary Union (EMU) is heavily biased towards inter-national accounts. Little attention is paid to who wins and who loses out intra-nationally. I argue that in Germany the EMU has reinforced dualization, the insider-outsider cleavage in the country’s welfare state and production model. To scrutinize this argument, I analyze longitudinal linked employer-employee data (N>9.6 mio) and pursue a mechanistic three-step identification strategy: First, I illustrate how the introduction of the Euro distorted real interest and exchange rates within the Eurozone. Second, I demonstrate how these imbalances redistributed rents from the domestic sector, in particular from construction, to the core manufacturing industry. Third, I show how this shift in industry rents reverberated to the wage distribution and increased inequality. The study contributes to resolve the puzzle why wage inequality in Germany increased through a fanning out of the wage distribution whereas countries similarly exposed to technological change and globalization grew unequal through a polarization of their wage distribution.

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“…Public support for the EMU and the euro is a prerequisite for such a shared sense of common destiny. It is a vital ingredient for reconciling powerful national interests among EA governments, which have been one of the sources of the EA crisis (Frieden and Walter, , p. 386).…”

Section: Public Support For the Euromentioning

confidence: 99%

Revisiting Public Support for the Euro, 1999–2017: Accounting for the Crisis and the Recovery

Roth

Baake

Jonung

et al. 2019

J of Common Market Studies

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This article explores the evolution and determinants of public support for the euro since its creation in 1999 until the end of 2017, thereby covering the pre‐crisis experience of the euro, the crisis years and the recent recovery. Using uniquely large macro and micro databases and applying up‐to‐date econometric techniques, the authors revisit the growing literature on public support for the euro. First, we find that a majority of citizens support the euro in nearly all 19 euro area member states. Second, we offer fresh evidence that economic factors are important determinants of change in the level of support for the euro: crisis reduces support while periods of recovery from unemployment bode well for public support. This result holds for both macroeconomic and microeconomic factors. Turning to a broad set of socioeconomic variables, we find clear differences in support due to education and perceptions of economic status.

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Understanding the Political Economy of the Eurozone Crisis

Cited by 150 publications

References 77 publications

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993–2008

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993–2008

Mercantilist dualization: the introduction of the euro, redistribution of industry rents, and wage inequality in Germany, 1993-2008

Revisiting Public Support for the Euro, 1999–2017: Accounting for the Crisis and the Recovery

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