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ISSN (Print) 0309-166X - ISSN (Online) 1464-3545
Published by Oxford University Press (OUP)

[330 journals]

Prospects for the eurozone
- Authors: Blankenburg, S; King, L, Konzelmann, S, Wilkinson, F.
  Pages: 463 - 477
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet015|hwp:master-id:cameco;bet015
  Issue No: Vol. 37, No. 3 (2013)
European economic governance: the Berlin-Washington Consensus
- Authors: Fitoussi, J.-P; Saraceno, F.
  Pages: 479 - 496
  Abstract: This paper argues that the European Union (EU) has gone further than any other country or institution in internalising the prescriptions of the Washington Consensus. Embedding neoliberal principles in the treaties defining its governance, the EU has enshrined a peculiar doctrine within its constitution. We further argue that this ‘Berlin–Washington Consensus’ has serious empirical and theoretical flaws, as its reliance on Pareto optimality leads to neglect the crucial links between current and potential growth. We show by means of a simple model that the call for structural reforms as an engine for growth may be controversial, once current and potential output are related. We claim that adherence to the Consensus may go a long way in explaining the poor growth performance of the European economy in the past two decades, because of the constraints that it imposed on fiscal and monetary policies. The same constraints have deepened the eurozone crisis that started in 2009, putting unwarranted emphasis on austerity and reform. Challenging the Consensus becomes a precondition for avoiding the implosion of the euro and recovering growth.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet003|hwp:master-id:cameco;bet003
  Issue No: Vol. 37, No. 3 (2013)
'Two or three things I know about her': Europe in the global crisis and heterodox economics
- Authors: Bellofiore; R.
  Pages: 497 - 512
  Abstract: Europe is in the middle of an economic and social storm. Although the turmoil since the mid-2008 originated elsewhere, the European dynamics may turn the Great Recession into a full-blown Great Depression. Within this dynamics, the faulty design of the ‘single currency’ is a key element, together with the neomercantilist fracture dividing the ‘core’ of Northern Europe and the ‘periphery’, mostly composed of Southern European countries. The paper gives a quick reminder of what the true nature of the global crisis is (Section 2). The neoliberal Great Moderation was a paradoxical kind of financial and ‘privatised Keynesianism’. The heart of the Anglo-Saxon model has been the overcoming of the stagnationist tendencies emerging from ‘traumatised workers’ thanks to the transformation of ‘manic savers’ into ‘indebted consumers’. I will then (Section 3) dissect the peculiarities of the neomercantilist export-led posture. The eventual establishment of the euro as the ‘single currency’ was in stark discontinuity with the Maastricht Treaty originating from the Delors Commission (Section 4). The real puzzle is to understand how the euro actually came into being from such fragile foundations, and also why for many years it seemed a happy experiment. The institutional setting of the eurozone and the German self-defeating obsession for fiscal austerity decisively drove the area into a double-dip recession. A way out of the crisis (Section 5) requires not only monetary reforms and expansionary coordinated fiscal measures, but also a wholesale change of economic model. This latter must be built upon a new ‘engine’ of demand and growth. A monetary finance of ‘good’ deficits is called for realising a radicalised ‘socialisation of the investment’: a class and Keynesian new deal.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet002|hwp:master-id:cameco;bet002
  Issue No: Vol. 37, No. 3 (2013)
In search of sustainable paths for the eurozone in the troubled post-2008 world
- Authors: Mazier, J; Petit, P.
  Pages: 513 - 532
  Abstract: The diversity in the eurozone has costs and advantages, respectively, for countries whether they are confronted with an overvalued or undervalued euro. Rough estimations of these costs and benefits help to assess the adjustments that could lead to a sustainable eurozone. A purely financial type of federalism, set up under the pressure of financial markets, risks falling short of the objective. A budgetary federalism, if it is based on long-term investment programmes with an enlarged political support, is more likely to meet the objective. A scheme of multispeed Europe could constitute a fallback solution if the political support for a budgetary federalism is not attained.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet012|hwp:master-id:cameco;bet012
  Issue No: Vol. 37, No. 3 (2013)
The euro crisis: undetected by conventional economics, favoured by nationally focused polity
- Authors: Boyer; R.
  Pages: 533 - 569
  Abstract: This article interprets the initial success of the launch of the euro and its ‘muddling through’ since the outbreak of the Greek sovereign debt crisis. Two interrelated processes interacted to deliver a quite complex idiosyncratic systemic crisis. First, new classical macroeconomics had diffused the belief that market economies are structurally stable, money is neutral, financial markets are efficient and that the only culprit is public finance. The euro crisis was thus inaccurately diagnosed. Second, in the political arena, monetary integration has been used by many governments as a justification for liberalisation reforms opposed by various domestic social groups. At the European level, most governments have been defending national interests, whereas the European Commission and European Parliament had lost most of their expertise and legitimacy in defending a common community in line euro ambitions. Crisis resolution calls for leadership from a key collective actor, to return coherence to the eurozone’s institutional setting.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet013|hwp:master-id:cameco;bet013
  Issue No: Vol. 37, No. 3 (2013)
International credit, financial integration and the euro
- Authors: Toporowski; J.
  Pages: 571 - 584
  Abstract: Prospects for the European Monetary Union are inevitably affected by the theoretical presuppositions of the observer. The most common approach, the theory of optimal currency areas, postulates that traded goods are produced by labour and the exchange rate between ‘national’ currencies is the ratio of commodity wages, expressed in monetary units, in different countries. In this analysis the exchange rate and wages are substitutes for obtaining international ‘competitiveness’. Such a view is the basis for current reflections about the future of the euro and the reduction of its difficulties to relative wages rates in different countries of the eurozone. The theory has two important limitations. First, it takes no account of the import intensity of exports, which would require wage adjustments to reinforce exchange rate adjustments, so that wages and exchange rates are necessarily complementary parameters, rather than being substitutes for each other. Hence, exit from the eurozone as a means of closing trade deficits would require additional austerity. Even more importantly, it is a commodity money theory, in which imbalances are accommodated by accumulations of specie or fiat money. However, in a credit economy, banking systems absorb trade imbalances into their balance sheets. Moreover, financial integration means that banking systems throughout Europe are vulnerable to balance sheet risks from exchange rate depreciation in any country in Europe.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet008|hwp:master-id:cameco;bet008
  Issue No: Vol. 37, No. 3 (2013)
Policy coordination, conflicting national interests and the European debt crisis
- Authors: Panico, C; Purificato, F.
  Pages: 585 - 608
  Abstract: This paper tries to identify the causes of and solutions to the debt crisis, by moving from the content of a previous debate on policy coordination in the euro area and from the available evidence on the existence of conflicting national interests within the governing bodies of the European Central Bank (ECB). It argues that before 2007 the flaws in the institutional organisation of the process of coordination between monetary and fiscal policy affected the cyclical and growth operation of the economies. After then, they have contributed to intensifying the conflicts among national and European authorities. The conflicts have curbed policy reactions, held back the interventions of the ECB, as occurred to the Federal Reserve during the crisis of 1929, and favoured the speculative attacks. The conclusion is that the organisation of the area must be reformed to allow its institutions to effectively pursue the objectives for which they were created, i.e. to protect the citizens from the instability of the international financial markets. As has been done in monetary policy, the reforms must reduce the uncertainty on the actual conduct of national policies and transform the defensive attitudes of the different actors of the process into a positive search for the most effective policy for the whole area
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet009|hwp:master-id:cameco;bet009
  Issue No: Vol. 37, No. 3 (2013)
At the crossroads: the euro and its central bank guardian (and saviour?)
- Authors: Bibow; J.
  Pages: 609 - 626
  Abstract: This paper investigates the role of the European Central Bank (ECB) in the (mal)functioning of Europe’s Economic and Monetary Union (EMU), focusing on the German intellectual and historical traditions behind the euro policy regime and its central bank guardian. The analysis contrasts Keynes’s chartalist conception of money and central banking with the peculiar post-World War II German traditions nourished by the Bundesbank and based on a fear of fiscal dominance. Keynes viewed the central bank as an instrument of the state, controlling the financial system and wider economy but ultimately an integral part of, and controlled by, the state. In contrast, the ‘Maastricht (EMU) regime’ (of German design) positions the central bank as controlling the state. Essentially, the national success of the Bundesbank model in pre-EMU times has left Europe stuck with a policy regime that is wholly unsuitable for the area as a whole. But regime reform is complicated by severely unbalanced competitiveness positions and debt-overhang legacies. Refocusing the ECB on growth and price stability would have to be a part of any solution, as would refocusing area-wide fiscal policy on growth and investment.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet004|hwp:master-id:cameco;bet004
  Issue No: Vol. 37, No. 3 (2013)
Revisiting Latin America's debt crisis: some lessons for the periphery of the eurozone
- Authors: Capraro, S; Perrotini, I.
  Pages: 627 - 651
  Abstract: A Domar–Pasinetti model of an emerging-market open economy with output growth endogenous to aggregate demand is presented, with foreign debt, interest and exchange rates playing a relevant role in the dynamics of the debt-to-GDP ratio (d). The model is used to assess the macroeconomic effects of the orthodox policy (fiscal austerity) implemented by policy makers to cope with the foreign debt crisis of Latin America in the 1980s. Such policy involved high costs in terms of welfare, job and output losses to no avail, since the region’s financial fragility remained largely unresolved, in the end resulting in the so-called ‘lost decade’. The main policy insight of Domar’s and Pasinetti’s analysis, we argue, posits a pro-growth expansionary policy as the most efficient strategy to abate and bring d to a sustainable path. Finally, we contend that Latin America’s experience provides insight for dealing with the ongoing crisis of the periphery of the eurozone.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet005|hwp:master-id:cameco;bet005
  Issue No: Vol. 37, No. 3 (2013)
Economic relations between Germany and southern Europe
- Authors: Simonazzi, A; Ginzburg, A, Nocella, G.
  Pages: 653 - 675
  Abstract: Two interpretations have been advanced to account for persistent German current account surpluses that translate into equally persistent deficits of countries in the European periphery. According to the first, the German surplus is the expression of a ‘virtuous’ savings behaviour, to be extended to the periphery. The second maintains that the increase in net exports reflects the stagnation of German domestic demand. The paper argues that differences in price competitiveness are only part of the explanation of the disequilibria and that an expansion of German internal demand, albeit necessary, would not suffice to provide a viable response to the long-term sustainability of the euro area. Adopting a multilevel perspective, the paper argues that to understand the persistence of deficits in the European periphery, the main features of the reorganisation of the German economic system, including its income redistribution and demand implications, should be considered. Three elements are singled out: the effects of eastward enlargement, the impoverishment of the productive matrix of peripheral countries and the quality composition of trade flows. This analysis, it is argued, is a crucial premise for devising trade and industrial policies targeted on redressing the increasing skewness of EU trade, especially through greater trade among the deficit countries.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet010|hwp:master-id:cameco;bet010
  Issue No: Vol. 37, No. 3 (2013)
Reconstructing the eurozone: the role of EU social policy
- Authors: Grahl, J; Teague, P.
  Pages: 677 - 692
  Abstract: It is widely recognised that the institutional architecture housing monetary union in Europe is deeply flawed. Although there has been considerable discussion about how these shortcomings can be put right, relatively little has been said about the role EU social policy can play in making the eurozone more stable and sustainable. The purpose of this paper is to address this shortcoming. It is argued that that some form of EU ‘social union’ is urgent, for without it the immediate financial problems facing the members of the eurozone cannot be resolved. The paper seeks to explain what role EU social policies can play in the construction of an adequate federal framework for the monetary union. It is argued that a fully fledged social union is unlikely to emerge that involves massive transfers from the European core to the periphery. At the same time, it is envisaged that EU social policy will need to be strengthened considerably, with interventions focusing on employment creation and on the capacity of national governments to maintain domestic social safety nets.
  PubDate: 2013-05-10T05:57:27-07:00
  DOI: 10.1093/cje/bet011|hwp:master-id:cameco;bet011
  Issue No: Vol. 37, No. 3 (2013)