Intereconomics - Review of European Economic Policy
Newsletter

Volume 47, September/October 2012

The September/October issue of Intereconomics features a Forum that examines whether the political and civic European spirit that helped to originally inspire the European unification project can still be reinvigorated after a decade-long focus on purely economic issues. Two additional articles look at employment from different perspectives – one argues that inequality is harmful for human capital formation and the other rejects the view that labour market reforms in one country necessarily harm the competitiveness of neighbouring countries. Further articles examine funding possibilities for telecommunications infrastructure, the reform of European governance, and Western countries’ attempts to marginalise UNCTAD and its work.

FEATURED TOPIC

Citizens' Europe: Crowded Out by Economic Focus

Over the last ten years the European unification project seemed to rely overwhelmingly on progress in economic terms. The most prominent achievements – the Single Market, the harmonisation of market regulation, the euro – were all driven by a rationale based on economic principles. However, attempts to rescue Europe from the ongoing financial crisis call for mutual support and solidarity, concepts that can hardly be derived from pure economic reasoning. The authors in this issue’s Forum explore what has become of the political and civic motivation for a united Europe. Has the pursuit of union based upon shared values been abandoned in favour of a purely economic vision? What message does this send in times of mistrust in markets and ever less promising economic prospects for the eurozone? Can a political, cultural and civic European spirit still be reinvigorated?

ADDITIONAL HIGHLIGHTS FROM THE CURRENT ISSUE

Inequality and Employment

Ronald Schettkat (University of Wuppertal) takes aim at natural rate theory, which has dominated economic policy discussions for decades. The theory’s claims that there is an inherent tradeoff between efficiency and inequality and that inequality creates incentives which facilitate human capital formation are criticised and dismissed as fallacies. Schettkat demonstrates that wealth redistribution can lay the foundation for human capital investment.

The ECB's Magic Wand

In this issue's Editorial, Zsolt Darvas (Bruegel) reviews the pros and cons of the ECB’s new Outright Monetary Transactions programme. He analyses – and rejects – several common criticisms of the bond-buying plan. Nonetheless, he argues that the OMTs are no panacea for the euro crisis and that politicians will ultimately need to make the necessary compromises to resolve the crisis.

Labour Market Reforms in a Globalised World

Gabriel Felbermayr (ifo Institute), Mario Larch (University of Bayreuth) and Wolfgang Lechthaler (Kiel Institute for the World Economy) examine the common belief that labour market reforms in one country negatively affect the competitiveness and employment levels of the country’s trading partners. They present empirical evidence which shows that this is not the case. Their article explains how such reforms ultimately reduce a country’s terms of trade – to the benefit of the country’s trading partners.

Current Issue of Intereconomics Online

QUOTE OF THE MONTH

Countries that reduce public service provision experience an increase in inequality and vice versa. Restricting public services to the minimum will harm efforts to equalise opportunities and may reduce the growth potential.

from Ronald Schettkat's article Inequality and Employment

About Intereconomics - Review of European Economic Policy

Intereconomics 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.

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Intereconomics - Review of European Economic Policy Newsletter

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