Intereconomics - Review of European Economic Policy
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CONTENTS |
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FEATURED TOPICMisunderstanding the EuroEMU is in trouble, and Heiner Flassbeck (UNCTAD) and Friederike Spiecker argue that European politicians continue to misunderstand the cause of the crisis. In an invited paper for Intereconomics Issue 4, 2011, they write that the source of the euro's troubles is the widely divergent competitiveness gap within EMU. Germany has unilaterally undercut the EU's stated 2% inflation target by restricting wage growth. This has led to an impressive increase in German competitiveness but has come at the expense of the other EMU countries. For the euro to be saved, Germany will have to end its belt tightening and allow increased wage growth. Meanwhile, Southern European countries must limit wage growth in order to increase their competitiveness. According to Flassbeck and Spiecker, this is the only hope for the euro to be saved. But if European leaders continue to misunderstand the fundamental economics of a single currency, the euro is destined to fail. |
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ADDITIONAL HIGHLIGHTS FROM THE CURRENT ISSUEProtectionism in the Great RecessionIn light of the increasing tendency of countries to adopt protectionist policies in response to the financial crisis of 2008, Mario Larch (University of Bayreuth) and Wolfgang Lechthaler (Kiel Institute for the World Economy) explore whether such policies can be effective in stimulating an economy in the middle of a downturn. Intangible Capital: the Key to GrowthIn the Economic Trends section, Hannu Piekkola (University of Vassa) examines the crucial role played by intangible capital in the future growth of Europe. These intangibles go beyond what is already covered in national accounts (e.g. entertainment, software, etc.) to include eight new types of intangible capital such as new financial products, branding and scientific R&D. Piekkola finds that intangible capital improves companies' profitability, and that EU GDP would be 5.5% higher if expenditures on intangibles were counted as investments rather than current costs. Asset Bubbles and the ECBThe ECB's willingness to dampen asset bubbles in the early stages of formation puts it squarely at odds with the U.S. Fed's "benign neglect" approach. In order to determine which policy approach is best-suited for the EU, Christian Drescher (University of Bayreuth) examines historical asset bubbles in eurozone countries. He comes to the conclusion that such bubbles tend to spread from one member country to another and build clusters, thus supporting the ECB's monetary policy strategy. |
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QUOTE OF THE MONTH
from Ansgar Belke and Christian Dreger's article Ramifications of Debt Restructuring on the Euro Area - The Example of Large European Economies' Exposure to Greece |
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About Intereconomics - Review of European Economic PolicyIntereconomics is jointly produced by ZBW - Leibniz Information Centre for Economics and the Centre for European Policy Studies (CEPS). The journal appears bimonthly and features papers by economists that deal with economic and social policy issues and trends in Europe or affecting Europe. To submit a paper for publication, please visit the Call for Papers section of our website for relevant information. Intereconomics is published by Springer-Verlag Berlin Heidelberg. Newsletter SubscriptionTo unsubscribe from the newsletter, please visit the following web page, enter your email address, and click "unsubscribe": http://www.intereconomics.eu/newsletter.php. To change your email address, please unsubscribe as explained above and then resubscribe using your new address.Editorial Office
Redaktion Intereconomics Phone: +49 (0)40 42834-306/307 and Centre for European Policy Studies (CEPS) Phone: +32 (0)2 229 39 11 Contact
Derek Kruse
Christine Klein |