Monthly Report No. 10/2018

Philipp Heimberger, Leon Podkaminer and Sandor Richter

No 2018-10, wiiw Monthly Reports from The Vienna Institute for International Economic Studies, wiiw

Abstract: Graph of the month Top 5 imports into the EU from DCFTA countries, 2017 Opinion corner Permanent fiscal deficits are desirable for the high income countries by Leon Podkaminer The polarisation of production structures in the Euro area by Philipp Heimberger The Euro area’s economic upswing over the course of the year 2018 has masked continued underlying polarisation of production capabilities between core and periphery countries. Ensuring long-term macroeconomic convergence and stability of the monetary union will require coordinated fiscal, wage and industrial policies. Economic disintegration of the European Union not improbable by Leon Podkaminer In this paper it is argued that European integration has not fulfilled its chief economic promises. Output growth has been increasingly weak and unstable. Productivity growth has been following a decreasing trend. This sorry state of affairs is likely to continue – and likely to precipitate further exits, or eventually, the dissolution of the Union. However, this outcome is not unavoidable. Moreover, the negative consequences implicit in the current architecture of the common currency could be neutralised. However, the basic paradigms of the economic policies to be followed in the EU would have to be radically changed. First, the unconditional fiscal consolidation provisions still in force would have to be repelled. Second, ‘beggar-thy-neighbour’ (or mercantilist) wage policies would have to be ‘outlawed’. Next EU budget and the financing of the Cohesion policy by Sándor Richter In the EU’s next Multiannual Financial Framework the share of Cohesion policy funds will likely be smaller than in the current one, leading to serious conflicts between net contributor and net beneficiary member states. The solution to avoid these conflicts may be the integration of a market based support of investment following the pattern of the “Juncker Plan” into the future cohesion policy. Statistical Annex Monthly and quarterly statistics for Central, East and Southeast Europe

Keywords: foreign trade; DCFTA; fiscal; deficit; fiscal policy; polarisation of production structures; core and periphery countries; macroeconomic convergence; Euro area; disintegration; EU; EU budget; Cohesion policy; EFSI; Juncker Plan (search for similar items in EconPapers)
Pages: 46 pages including 1 Tables and 11 Figures
Date: 2018-10
New Economics Papers: this item is included in nep-mac
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