Macroeconomic Challenges in the Euro Area and the Acceding Countries
Katja Drechsel
Dissertation, Online-Publikation,
2010
Abstract
The conduct of effective economic policy faces a multiplicity of macroeconomic challenges, which requires a wide scope of theoretical and empirical analyses. With a focus on the European Union, this doctoral dissertation consists of two parts which make empirical and methodological contributions to the literature on forecasting real economic activity and on the analysis of business cycles in a boom-bust framework in the light of the EMU enlargement. In the first part, we tackle the problem of publication lags and analyse the role of the information flow in computing short-term forecasts up to one quarter ahead for the euro area GDP and its main components. A huge dataset of monthly indicators is used to estimate simple bridge equations. The individual forecasts are then pooled, using different weighting schemes. To take into consideration the release calendar of each indicator, six forecasts are compiled successively during the quarter. We find that the sequencing of information determines the weight allocated to each block of indicators, especially when the first month of hard data becomes available. This conclusion extends the findings of the recent literature. Moreover, when combining forecasts, two weighting schemes are found to outperform the equal weighting scheme in almost all cases. In the second part, we focus on the potential accession of the new EU Member States in Central and Eastern Europe to the euro area. In contrast to the discussion of Optimum Currency Areas, we follow a non-standard approach for the discussion on abandonment of national currencies the boom-bust theory. We analyse whether evidence for boom-bust cycles is given and draw conclusions whether these countries should join the EMU in the near future. Using a broad range of data sets and empirical methods we document credit market imperfections, comprising asymmetric financing opportunities across sectors, excess foreign currency liabilities and contract enforceability problems both at macro and micro level. Furthermore, we depart from the standard analysis of comovements of business cycles among countries and rather consider long-run and short-run comovements across sectors. While the results differ across countries, we find evidence for credit market imperfections in Central and Eastern Europe and different sectoral reactions to shocks. This gives favour for the assessment of the potential euro accession using this supplementary, non-standard approach.
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Central Banks, Trade Unions and Reputation – Is there Room for an Expansionist Manoeuvre in the European Union?
Toralf Pusch, A. Heise
Journal of Post Keynesian Economics,
2010
Abstract
It is now a few years since the introduction of the common currency, and Europe is still experiencing high unemployment. The conventional logic attributes this problem to flaws in the labour market. In this article we look at the changes that occur if labour unions and the Central Bank have different options to choose from in a climate of uncertainty. In a single-stage game the most probable outcome is a high unemployment rate. Results change dramatically if the game is repeated. However, this effect does not occur if the Central Bank puts a too high weight on price stability. Secondly, if the trade unions do not possess the capability for coordinating and moderating their wage claims, a full employment equilibrium is out of range.
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State Aid in the Enlarged European Union. An Overview
Jens Hölscher, Nicole Nulsch, Johannes Stephan
Abstract
In the early phase of transition that started with the 1990s, Central and Eastern European Countries pursued economic restructuring of the enterprise sector that involved massive injections of state support. Also foreign investment from the West and facilitation of the development of a market economy involved massive injections of state support. With their accession to the European Union (EU), levels and forms of state aid came under critical review by the European Commission. This inquiry investigates whether the integration of the new member states operates on a level playing field with respect to state aid. Quantitative and qualitative analysis is relied upon to answer this key, as well as other, related questions. Findings suggest that in recent years a level playing field across the EU has indeed emerged. State aid in the new EU member countries is rather handled more strictly than laxer compared to the ‘old’ EU countries.
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The Gradual Way to European Monetary Union
Lucjan T. Orlowski
One-off Publications,
No. 3,
2010
Abstract
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“Geschäftsmodell Deutschland“ und außenwirtschaftliche Ungleichgewichte in der EU
Renate Ohr, Götz Zeddies
List Forum für Wirtschafts- und Finanzpolitik,
2010
Abstract
During the last decades, current account imbalances increased all over the world. In this context, countries with current account surpluses, in the European Union especially Germany, are increasingly blamed for their modest wage policies, which are seen as the main reason for global imbalances. On the basis of a panel data model, the present paper indentifies the determinants of current account imbalances of EU Member States. As the results show, price competitiveness is, although significant, only one out of many explanatory variables. Instead, current account imbalances are substantially caused by divergent propensities to save. This does not only relate to public, but also to private savings. Accordingly, demands addressed to Germany and other countries for higher wage agreements alone would be unrewarding. Instead, domestic demand in surplus countries should be increased by other means. On the other hand, in countries with current account deficits, existing savings potentials should be adequately exploited.
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Wege aus der Schulden- und Vertrauenskrise in der Europäischen Wirtschafts- und Währungsunion
Diemo Dietrich, Oliver Holtemöller, Axel Lindner
Wirtschaft im Wandel,
No. 8,
2010
Abstract
Die Europäische Wirtschafts- und Währungsunion (EWWU) befindet sich gegenwärtig in einer Schulden- und Vertrauenskrise. Die europäischen Institutionen haben darauf mit einer Reihe von Maßnahmen reagiert: Ein Finanzstabilisierungsmechanismus wurde geschaffen, und die Europäische Zentralbank hat damit begonnen, die Anleihen von denjenigen Mitgliedsstaaten des Euro-Währungsgebietes aufzukaufen, die auf den Finanzmärkten gar nicht mehr oder nur zu relativ hohen Zinsen Finanzmittel aufnehmen können. Zwar können diese Maßnahmen kurzfristig geeignet sein, die Lage zu stabilisieren; langfristig sind sie jedoch problematisch. So wird das Überschuldungsproblem Griechenlands nicht dauerhaft gelöst und die Krisenanfälligkeit sowohl des Finanzsystems als auch der Mitgliedsstaaten selbst wird nicht gemindert. Die durch die ergriffenen Maßnahmen gewonnene Zeit muss unbedingt zur Stärkung der Institutionen im Euro-Währungsgebiet genutzt werden. Eine graduelle Modifikation des Stabilitäts- und Wachstumspaktes oder die Schaffung neuer politischer Institutionen, zum Beispiel einer europäischen Wirtschaftsregierung, wird dies nicht leisten können. Vielmehr bedarf es der Einsicht, dass Krisen Bestandteil marktwirtschaftlich organisierter Volkswirtschaften sind und dass vorab vereinbarte Regeln für den Umgang mit ihnen festgelegt werden müssen. Dazu zählt vor allem eine Insolvenzordnung für Banken und auch für Staaten, um systemische Risiken zu reduzieren.
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Poverty in EU Countries
Herbert S. Buscher, Ingmar Kumpmann, Li Huan
Wirtschaft im Wandel,
No. 6,
2010
Abstract
The contribution provides an overview of several poverty measures in European countries. These measures are recommended by the so-called Laeken criteria and include, among others, the level of poverty income, the Gini coefficient as a measure of inequality of the income distribution as well as the 90/10- and the 80/20-ratio of the income distribution to shed light on the relation of the income shares in the extreme tails of the distribution. Compared over the years 2000 and 2008, the results indicate an increase in poverty in Europe over time, with Germany being located in the middle of the selected countries. Relative poverty is most severe in the new EU member states such as Romania, Bulgaria, and Latvia.
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The Emergence of Wage Coordination in the Central Western European Metal Sector and its Relationship to European Economic Policy
Vera Glassner, Toralf Pusch
Abstract
In the European Monetary Union the transnational coordination of collective wage bargaining has acquired increased importance on the trade union agenda. The metal sector has been at the forefront of these developments. This paper addresses the issue of crossborder coordination of wage setting in the metal sector in the central western European region, that is, in Germany, the Netherlands and Belgium, where coordination practices have become firmly established in comparison to other sectors. When testing the interaction of wage developments in the metal sector of these three countries, relevant macroeconomic (inflation and labour productivity) and sector-related variables (employment, export-dependence) are considered with reference to the wage policy guidelines of the European Commission and the European Metalworkers’ Federation. Empirical evidence can be found for a wage coordination effect in the form of increasing compliance with the wage policy guidelines of the European Metalworkers’ Federation. The evidence for compliance with the stability-oriented wage guideline of the European Commission is weaker.
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Leistungsbilanzungleichgewichte in der EU – Eine Herausforderung für die europäische Fiskalpolitik?
Toralf Pusch
Wirtschaft im Wandel,
No. 5,
2010
Abstract
In the European Monetary Union there is an ongoing debate about the sustainability of high and long-lasting current account deficits and surpluses. In light of the questions of its proper working as a currency area and inspired by the Optimum Currency Area theory, economic policy proposals have been developed for the institutional amendment of European fiscal policy. This contribution questions if the existing proposals are suitable for addressing the problem of current account balances which are deemed to be excessive. Alternatives have to be developed with a symmetrical impact, thus targeting excessive current account deficits and surpluses as well. At the same time, a challenge for such an alternative would be a more effective implementation than the existing modes of European economic policy coordination.
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