Wirtschaftsdienst - Zeitschrift für Wirtschaftspolitik

Newsletter – Volume 50, May/June 2015

The May/June issue of Intereconomics features a Forum that revisits Europe’s industrial policy. A strong EU-wide industrial policy is expected to foster growth and job creation. However, cultivating industrial development is a complex challenge. Experts in the field – including Joseph E. Stiglitz, Giovanni Dosi and Mariana Mazzucato – address the steps that need to be taken to create a new European industrial policy. This issue’s Editorial explains why there is reason for optimism in Ukraine, while Alan H. Meltzer’s Letter from America discusses the dangers of quantitative easing policies in the US and the EU. This issue also features a response from Thomas Straubhaar to the most recent Intereconomics Forum on currency interventions, as well as articles on deflationary risks in the eurozone and the polarisation of employment and industrial production in Europe.

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Featured Topic

Which Industrial Policy Does Europe Need?

One lesson of the Great Recession has been that countries with higher shares of industry in their GDP seemed to be less affected by the crisis. Consequently, the call for an industrial renaissance has become stronger. Industrial policy has now become a top priority in countries where it was not explicitly considered in the past. A strong EU-wide industrial policy is expected to foster growth and job creation. However, cultivating industrial development is a complex challenge. This Forum, featuring contributions by Mariana Mazzucato, Mario Cimoli, Giovanni Dosi, Joseph E. Stiglitz, Michael A. Landesmann, Mario Pianta, Rainer Walz and Tim Page, addresses the steps that need to be taken to create a new European industrial policy. What are the structural challenges that need to be addressed? What are the instruments of the EU's industrial policy? And should the EU be engaged in picking winners, or is the market better at making such judgements?

Additional Highlights from the Current Issue

Why This Time Is Different for Ukraine

The Ukrainian government has committed to implement far-reaching reforms in exchange for the support it is getting from the international community, led by the International Monetary Fund. Understandably, given Ukraine's disappointing transition history, there is widespread scepticism on whether the country will live up to its commitments. Three failed IMF programmes later, Erik Berglof (London School of Economics) explains why this time is different for Ukraine.

Should Central Banks Manage the Exchange Rate?

Should central banks intervene in currency markets? In theory, within a flexible system, central banks should leave the process of determining appropriate exchange rates to the currency markets. In practice, however, central banks have frequently intervened to "manage" the exchange rates according to their goals and priorities. Thomas Straubhaar (University of Hamburg and Transatlantic Academy) discusses whether central banks can effectively intervene in currency markets and describes some lessons other countries could learn from the Swiss experience.

The QE Trap

Alan H. Meltzer (Carnegie Mellon University) asserts that the U.S. Federal Reserve’s initial round of quantitative easing in 2008 successfully provided enough reserves to prevent a major banking crisis. Thereafter, however, the Fed made some major errors, supplying a total of $4 trillion in additional reserves, most of which sit idle on bank balance sheets. The ECB is now several months into its own QE program. While it will have some positive near-term effects, QE cannot solve the problems of the eurozone. For the eurozone to survive, it must permit real wages within countries to adjust so as to make production costs compatible across countries.

Current Issue of Intereconomics Online


Quote of the Month

Even if a true truce with Russia and the separatists seems elusive, there are signs that the grip of the oligarchs is loosening, in part due to internal conflicts among them. For Ukraine, this time is different.

from Erik Berglof's Editorial Why This Time Is Different for Ukraine

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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Derek Kruse
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