Social Models, Growth and the International Monetary System: Implications for Europe and the United States

Roberto Scazzieri () and Lilia Costabile ()

Working Papers from Political Economy Research Institute, University of Massachusetts at Amherst

Abstract:

This paper explores the relationship between economic growth and the welfare state. We argue that: (i) the institutional constraints set by the international monetary system may be at least as effective determinants of growth differentials between countries as the different dimensions of their welfare states. We show how this international system may impose an asymmetric discipline/flexibility mix on the macreoconomic policies of different countries, thereby influencing their growth performance.; (ii) the European currency reshapes some of the pre-existing constraints and also open up new opportunities; (iii) in the new international setting, Europe is facing a choice between alternative models. In one alternative, the “welfare system” needs to be reduced to a minimum; in the second, its role should be enhanced and made more active, through an appropriate mix of welfare policies oriented towards the promotion of social well-being and policies oriented towards the promotion of productive capacities.

Keywords: international monetary system; macroeconomic policies; welfare state; welfare policies (search for similar items in EconPapers)
JEL-codes: F02 F33 F43 D02 I0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-eec
Date: Written 2006
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