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Competitiveness, Adjustment and Macroeconomic Risk Management in the Eurozone

Peter Spahn ()

No 201316, ROME Working Papers from ROME Network

Abstract: Gaps in competitiveness, rooted in economic as well as in political factors, characterise postwar European economic history. The eurozone experience showed the emergence of large current account imbalances. The peculiar mixture of financial markets integration and national cycles in wages and prices gave rise to severe macroeconomic instability. The Swan Diagram is used to analyse alternative adjustment policies. Although there are signs of convergence in wage costs, the overall picture of EMU remains somewhat gloomy, requiring the decision between full political union or a renewed gold standard.

Keywords: Currency union; euro crisis; current account imbalances; wage policy; Swan diagram (search for similar items in EconPapers)
JEL-codes: E50 E58 E63 F32 F34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-mac and nep-opm
Date: 2013-12
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