Intra-European imbalances, adjustment, and growth in the eurozone

Paolo Guerrieri and Piero Esposito

Oxford Review of Economic Policy, 2013, vol. 28, issue 3, 532-550

Abstract: This paper considers the increase in the Euro intra-area imbalances since the late 1990s and their role in the current European debt crisis. By focusing on the case study of Italy and Germany, we argue that both macroeconomic (the functioning of the euro area) and microeconomic (internationalization of production) factors contributed to the creation of such imbalances. When sovereign risk and currency risk emerged in the periphery, coupled with austerity as a response to these risks, both factors made the euro crisis worse. The present zero-sum-game approach is very risky for the stability of the euro area. Policy coordination of some kind is needed. This requires agreeing on well-identified economic policy priorities, taking full account of the different positions of the members in terms of growth, external imbalances, and competitiveness. New policy priorities are thus required in the euro zone that put more emphasis on cooperative (positive-sum) games in convergence and competitiveness. Copyright 2013, Oxford University Press.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://hdl.handle.net/10.1093/oxrep/grs026 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:28:y:2013:i:3:p:532-550

Access Statistics for this article

Oxford Review of Economic Policy is currently edited by Christopher Adam

More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited
Bibliographic data for series maintained by Oxford University Press ().