Convergence and Divergences in the European Economy: Rebalancing and Being Competitive in a Non-optimal Monetary Union
AbstractThis paper analyzes the structures, tendencies and challenges of the euro zone due to its non-optimal nature. The impact of the euro is asymmetric and contradictory: in the glorious ten first years a miracle and many bubbles appeared in some euro peripheral economies but they collapsed and enter in an inferno, in a trap despite its rescue by the European Union. The European challenges on competitiveness due to the deficits on productivity and competition are concentrated in the periphery. The virtuous euro zone states, reformed and applying ruled policies, have enlarged their competitiveness. The euroimbalances grew changing the convergence into huge divergences. The structural challenges of the European economy were propelled i) by the non-optimal condition of the euro zone, in particular the no movement of workers, the inflexibility of wages and costs and the no banking union; and b) by the European economic governance deficit, in particular the contradiction between a non-optimal monetary union and the divergent state’ fiscal policies. Europe is an anchor… or a torpedo. The euro zone and its member states are rebalancing, deleveraging and adjusting internally the economies, walking to be competitive. The Union is helping on this, reassessing the added value of Europe. Europe is coming to be an optimal currency area. Nevertheless the Union is suffering from two systemic risks: i) economic because of recession, public failure and credit crunch; and ii) institutional because of having no the instruments of his needs, the emerging euroscepticism, and the tendencies to the disintegration both of the Union and of certain member states. Then there is a need for Europe, acute in many countries. And there is a new task for the Union as regulatory quality developer and even as state builder.
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Bibliographic InfoPaper provided by Instituto Universitario de Análisis Económico y Social in its series Working Papers with number 03/13.
Length: 38 pages
Date of creation: Mar 2013
Date of revision:
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Stability; Competitiveness; European Monetary Union; Europe; Economic Policy.;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-02 (All new papers)
- NEP-EEC-2013-11-02 (European Economics)
- NEP-MON-2013-11-02 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gian-Maria Milesi-Ferretti & Olivier J. Blanchard, 2009. "Global Imbalances," IMF Staff Position Notes 2009/29, International Monetary Fund.
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- Jean Pisani-Ferry & Silvia Merler, 2012. "The simple macroeconomics of North and South in EMU," Working Papers 740, Bruegel.
- C. Fred Bergsten & Jacob Funk Kirkegaard, 2012. "The Coming Resolution of the European Crisis," Policy Briefs PB12-1, Peterson Institute for International Economics.
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