Intereconomics - Review of European Economic Policy

Intereconomics - Review of European Economic Policy
Press Release

Volume 47, November/December 2012

The November/December issue of Intereconomics features a Forum that examines the next reshaping of the EU’s Common Agricultural Policy. With an eye towards next year’s expected policy revision, the five Forum contributions provide concrete suggestions to improve the CAP. This issue’s Articles focus on financial repression in the USA and the EU, aggregation bias in the interest rate pass-through, and a proposal for a European recovery programme for the countries hit by the crisis. The Economic Trends article explores the continued success of German exporters even as the euro crisis affects many of their prime customers. The issue leads with an impassioned Editorial denouncing Europe’s current austerity path.


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The Common Agricultural Policy After 2013

In October 2011 the European Commission presented a set of legal proposals designed to make the Common Agricultural Policy more effective. Pending a debate in the European Parliament and the Council, approval is expected by the end of 2013. This Forum identifies the proposals' shortcomings and offers suggestions for improvement which the Parliament and Council can work to implement. The authors pay particular attention to the future of direct payments, CAP greening and rural development, as well as to the change in the decision-making rules which grants the Parliament more authority over the process.

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Austerity’s Internal Contradictions

In this issue's Editorial, Michael Hudson (University of Missouri-Kansas City) takes on the austerity programmes that Germany and the IMF are forcing upon the eurozone crisis-stricken countries. He refers to austerity’s supporters as a “bankers’ sectarian cult”, arguing that the policy only benefits wealthy creditors, to the detriment of debtors and the non-wealthy 99%.

Financial Repression and Debt Liquidation in the USA and the Euro Area

Andreas Hoffmann (University of Leipzig) and Holger Zemanek (University of Leipzig) examine the revival of financial repression in the euro area and the USA due to rising debt levels. The Federal Reserve directly represses US bond yields, which in 2011 resulted in an overall liquidation effect of about three per cent of total government revenues and one per cent of GDP. In the euro area, the ongoing actions to contain the European debt crisis have also repressed interest rates, easing debt-servicing costs in all European countries and reducing the interest rate payments for the German government by about one to two per cent of total government revenues. This article argues that a slight rise in inflation could even liquidate German debt.

German Trade Performance in Times of Slumping Euro Area Markets

Nils Jannsen (Kiel Institute for the World Economy) and Stefan Kooths (Kiel Institute for the World Economy) explore why the impact of the euro area crisis on economic activity in Germany has so far been relatively mild. Trade flows by region reveal that German firms have recently redirected their exports towards the remaining growth spots of the world economy, in particular to Asia’s emerging economies. However, a continued crisis in the euro area is likely to put a considerable dent in German exports. The authors argue that German exporters may play a helpful role in the rebalancing of intra-European trade flows if firms in distressed countries circumvent high entry costs by integrating themselves into the global value chains of German exporters.

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Instead of promoting European financial integration, ECB policy is forcing debtor countries to choose between imposing depression on a Lost Generation of unemployed young adults or withdrawing from the eurozone.

from Michael Hudson’s article Austerity’s Internal Contradictions

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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