This policy study by Juan Montecino provides a macro-development perspective on the euro area imbalances. Drawing on insights from development economics, the author provides an overview of the link between external competitiveness, current account imbalances and an economy’s long-term productivity growth.
The study argues that recent macroeconomic trends in the Euro Area suggest that Germany’s current account surpluses are responsible for a ‘Dutch disease’-style de-industrialisation in periphery economies. There are also tentative signs that the loss of competitiveness may leave lasting scars on these economies’ levels of productivity.
The study concludes with some tentative policy recommendations to help address these structural imbalances. On the core country level, these include adopting an expansionary fiscal stance and pursuing wage growth. On the European level, re-engineering industrial policy and the use of targeted subsidies could re-align the real effective exchange rates of core and periphery countries and contribute to solving the problem.
This research is part of a cooperation between FEPS and the Initiative for Policy Dialogue (IPD), based at Columbia University, founded by Nobel Laureate Joseph E. Stiglitz.
“Trade doesn’t work in isolation from good domestic policies” Interview to Arancha González
by Borderlex 19/09/2023
Interview to Arancha González, former Spanish foreign minister, who released together with FEPS the new book entitled 'The Trade Handbook: Making Trade Work for Prosperity, People and Planet'
A szociális unió imperatívusza
by Új Egyenlőség 09/09/2023
'The imperative of Social Union'. Article about FEPS book 'Europe’s Social Integration: Welfare Models and Economic Transformations' by László Andor.
Após 66 anos de adiamentos, a barragem do Pisão entrou em contra-relógio
by Pùblico 19/08/2023
'After 66 years of postponements, the Pisão dam has entered a race against time' Pùblico's article mentions FEPS Policy Study 'Governing the RRF'
Ukrainian economy and society: whither the (postwar) country?
by Commons 16/06/2023
In Commons' article, Yuliya Yurchenko, co-author of FEPS’ book 'Europe and the war in Ukraine', outlines the consequences of the Russian invasion of Ukraine for the Ukrainian population and the plans needed for Ukraine's recovery.
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