The growth performance and prospects in the Euro area: a balance-of-payments approach
AbstractThis paper aims to apply the balance of payments constrained-growth model to explain Euro area growth performance in the last forty years and to discuss likely prospects for the future. After a formal reconsideration of the long-run and short-run arguments supporting the validity of the Post-Keynesian approach to economic growth, a simplified and an extended version of the basic model are outlined. The application of these models to the Euro area experience shows that Thirlwall’s Law performs quite well in explaining growth in all decades under consideration. The fundamental reasons behind the recent unsatisfactory EMU growth experience, therefore, appear to be a decreasing export dynamics and a rising dependence on imports. Given current trends, the prospects for the future appear to be gloomy, unless structural reforms of the productive system are promoted in order to improve overall EMU competitiveness.
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Bibliographic InfoPaper provided by University of Pavia, Department of Economics and Management in its series DEM Working Papers Series with number 067.
Length: 28 pages
Date of creation: Feb 2014
Date of revision:
Growth; Euro area; Thirlwall’s Law; balance-of-payments constraint; import and export functions;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-08 (All new papers)
- NEP-EEC-2014-02-08 (European Economics)
- NEP-INT-2014-02-08 (International Trade)
- NEP-MAC-2014-02-08 (Macroeconomics)
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