Policy Coordination, Convergence, and the Rise and Crisis of EMU Imbalances

Giuseppe Bertola

No 490, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: If economic integration fosters expectations of institutional and productivity convergence, then international capital flows should be driven by consumption-smoothing anticipation of future income growth patterns as well as by factor-intensity equalization. In the euro area, financial market integration eased accumulation of international imbalances but does not appear to have resulted in the expected institutional convergence. The resulting crisis casts doubt on the sustainability not only of international imbalances, but also of the current configuration of the European integration process. A robust and coherent European market and policy integration process would require supranational implementation of the behavioral constraints and contingent redistribution schemes that traditionally operate within National socio-economic systems, and have been weakened in recent experience by uncoordinated policy competition.

JEL-codes: E63 F21 F36 F42 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2013-04
New Economics Papers: this item is included in nep-eec, nep-mac and nep-opm
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Citations: View citations in EconPapers (24)

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Related works:
Working Paper: Policy Coordination, Convergence, and the Rise and Crisis of EMU Imbalances (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0490

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