Fiscal Policy, Labour Markets and the Difficulties of Inter-Country Adjustment within EMU

Christopher Allsopp and David Vines

Chapter 5 in The Travails of the Eurozone, 2007, pp 95-122 from Palgrave Macmillan

Abstract: Abstract This chapter examines the macroeconomic performance of the euro area. It is widely agreed that this performance has been poor; low growth and poor productivity performance have been combined with high and rising unemployment and, especially in the ‘core’ countries, with budget deficits and increasing government debt. This poor performance on the real side has not, however, been matched by undershooting on inflation. It thus appears that the ‘trade-off between growth and inflationary pressure has become highly adverse within the euro area. The Lisbon ‘agenda’ of reforms to the European macro-economy — which was intended to improve the potential for non-inflationary growth — appears to be in tatters.

Keywords: Interest Rate; Monetary Policy; Price Level; Fiscal Policy; Euro Area (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-80147-9_5

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DOI: 10.1057/9780230801479_5

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