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Current Account Imbalances, the Eurozone Crisis, and a Proposal for a "European Wage Standard"


  • Emiliano Brancaccio


The crisis in the European Monetary Union cannot be attributed simply to the growth of government deficits in its member countries. Current account imbalances between eurozone members and the resulting accumulation of external private and public credit and debt appear to be further causes of instability. The gap between unit labor costs seems to be one of the determinants of trade imbalances. Germany, in particular, despite its current account surplus, has adopted a policy of relative wage deflation in recent years that has increased this gap. The adoption of a "European wage standard" may prompt countries with surpluses to generate higher growth in nominal wages, prices, and wage shares, thus helping to restore the balance in trade and safeguard European unity.

Suggested Citation

  • Emiliano Brancaccio, 2012. "Current Account Imbalances, the Eurozone Crisis, and a Proposal for a "European Wage Standard"," International Journal of Political Economy, Taylor & Francis Journals, vol. 41(1), pages 47-65.
  • Handle: RePEc:mes:ijpoec:v:41:y:2012:i:1:p:47-65
    DOI: 10.2753/IJP0891-1916410102

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    Cited by:

    1. Valentini, Enzo & Arlotti, Marco & Compagnucci, Fabiano & Gentili, Andrea & Muratore, Fabrizio & Gallegati, Mauro, 2017. "Technical change, sectoral dislocation and barriers to labor mobility: Factors behind the great recession," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 187-215.
    2. Davide Antonioli & Paolo Pini, 2014. "Retribuzioni e produttivit?: un nuovo modello di contrattazione per fermare il declino," PRISMA Economia - Societ? - Lavoro, FrancoAngeli Editore, vol. 2014(1), pages 79-93.
    3. Chiara Colesanti Senni & Giorgio Ricchiuti, 2013. "Sulle Possibili Strategie di Uscita dalla Crisi," Working Papers - Economics wp2013_17.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. Andreas Bieler & Jamie Jordan & Adam David Morton, 2019. "EU Aggregate Demand As a Way out of Crisis? Engaging the Post‐Keynesian Critique," Journal of Common Market Studies, Wiley Blackwell, vol. 57(4), pages 805-822, July.
    5. Davide Antonioli & Paolo Pini, 2014. "Europe and Italy: Expansionary Austerity, Expansionary Precariousness and the Italian Jobs Act," Working Papers 2014153, University of Ferrara, Department of Economics.
    6. Paolo Pini, 2013. "Cinque azioni per la crescita e l?occupazione, in un contesto di politiche contro l?"austerit? espansiva"," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 0(2), pages 86-96.
    7. Stefano Lucarelli & Roberto Romano, 2016. "The Italian Crisis within the European Crisis. The Relevance of the Technological Foreign Constraint," World Economic Review, World Economics Association, vol. 2016(6), pages 1-12, February.
    8. Emiliano Brancaccio & Nadia Garbellini, 2015. "Currency regime crises, real wages, functional income distribution and production," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 12(3), pages 255-276, December.
    9. Hope, David, 2016. "Estimating the effect of the EMU on current account balances: A synthetic control approach," European Journal of Political Economy, Elsevier, vol. 44(C), pages 20-40.
    10. Mirdala, Rajmund & Ruščáková, Anna, 2015. "On Origins and Implications of the Sovereign Debt Crisis in the Euro Area," MPRA Paper 68859, University Library of Munich, Germany.
    11. Agnieszka Gehringer, 2015. "New evidence on the determinants of current accounts in the EU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(4), pages 769-793, November.
    12. Helena Glebocki Keefe & Ralf Hepp, 2024. "The effects of European fiscal discipline measures on current account balances," International Economics and Economic Policy, Springer, vol. 21(1), pages 251-283, February.
    13. Mirdala, Rajmund & Semančíková, Jozefína & Ruščáková, Anna, 2019. "Determinants of Export and Import Functions in the EU Member Countries," MPRA Paper 99535, University Library of Munich, Germany.
    14. Askenazy, Philippe, 2013. "Capital Prices and Eurozone Competitiveness Differentials," CEPREMAP Working Papers (Docweb) 1301, CEPREMAP.
    15. Anna Ruščáková & Jozefína Semančíková, 2016. "European Debt Crisis: Theoretical And Empirical Investigation Of External Imbalances As One Of Its Main Causes," Poslovna izvrsnost/Business Excellence, Faculty of Economics and Business, University of Zagreb, vol. 10(2), pages 191-207.
    16. Emiliano Brancaccio, 2019. "Sulle condizioni per una rivoluzione della teoria e della politica economica (On the conditions for a revolution of economic theory and policy)," Moneta e Credito, Economia civile, vol. 72(287), pages 197-206.
    17. Califano, Andrea & Gasperin, Simone, 2019. "Multi-speed Europe is already there: Catching up and falling behind," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 152-167.
    18. Emiliano Brancaccio, 2023. "Centralizzazione del capitale, guerra e pace (Centralization of capital, war and peace)," Moneta e Credito, Economia civile, vol. 76(304), pages 339-356.

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