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Economic relations between Germany and southern Europe

Author

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  • Annamaria Simonazzi
  • Andrea Ginzburg
  • Gianluigi Nocella

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. Copyright , Oxford University Press.

Suggested Citation

  • Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 653-675.
  • Handle: RePEc:oup:cambje:v:37:y:2013:i:3:p:653-675
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    File URL: http://hdl.handle.net/10.1093/cje/bet010
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    References listed on IDEAS

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    Cited by:

    1. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller & Bernhard Schütz, 2017. "Is Europe Disintegrating? Macroeconomic Divergence, Structural Polarisation, Trade and Fragility," wiiw Working Papers 136, The Vienna Institute for International Economic Studies, wiiw.
    2. Mario Pianta, 2014. "An industrial policy for Europe," Working Papers 1401, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    3. repec:taf:rripxx:v:24:y:2017:i:5:p:904-928 is not listed on IDEAS
    4. Lucchese, Matteo & Nascia, Leopoldo & Pianta, Mario, 2017. "Politica industriale e tecnologia in Italia
      [Industrial policy and technology in Italy]
      ," MPRA Paper 77182, University Library of Munich, Germany.
    5. Philipp Heimberger & Jakob Kapeller, 2017. "The performativity of potential output: pro-cyclicality and path dependency in coordinating European fiscal policies," Review of International Political Economy, Taylor & Francis Journals, vol. 24(5), pages 904-928, September.
    6. Alberto Botta, 2014. "Structural Asymmetries at the Roots of the Eurozone Crisis: What’s New for Industrial Policy in the EU?," Economics Working Paper Archive wp_794, Levy Economics Institute.
    7. Alberto Botta, 2014. "Structural asymmetries at the roots of the eurozone crisis: what's new for industrial policy in the EU?," PSL Quarterly Review, Economia civile, vol. 67(269), pages 169-216.
    8. L. Giordano & A. Lopes, 2016. "Monetary Policy, Credit and Territorial Imbalances in Europe in Crisis Times," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1, pages 121-176.
    9. Enno Schröder, 2015. "Eurozone Imbalances: Measuring the Contribution of Expenditure Switching and Expenditure Volumes 1990-2013," Working Papers 1508, New School for Social Research, Department of Economics, revised Sep 2015.
    10. repec:ibn:ibrjnl:v:10:y:2017:i:9:p:17-30 is not listed on IDEAS
    11. Valeria Cirillo & Dario Guarascio & Mario Pianta, 2014. "Will Europe’s industry survive the crisis? Competitiveness, employment and the need for an industrial policy," Working Papers 1408, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    12. Matteo Lucchese & Leopoldo Nascia & Mario Pianta, 2016. "Industrial policy and technology in Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(3), pages 233-260, September.
    13. repec:liu:liucej:v:14:y:2017:i:1:p:37-56 is not listed on IDEAS
    14. Carolina Hintzmann, 2015. "An Analysis of Differences in Labour Productivity in Manufacturing. Displaying the Need for a Resurgence of Industrial Policy: Spain vs Germany, 1993-2007," Hacienda Pública Española, IEF, vol. 212(1), pages 97-126, March.
    15. Valeria Cirillo & Marta Fana & Dario Guarascio, 2017. "Labour market reforms in Italy: evaluating the effects of the Jobs Act," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(2), pages 211-232, August.
    16. Eckhard Hein & Daniel Detzer, 2014. "Coping with imbalances in the Euro area: Policy alternatives addressing divergences and disparities between member countries," Working papers wpaper63, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    17. Eckhard Hein & Daniel Detzer, 2015. "Post-Keynesian Alternative Policies to Curb Macroeconomic Imbalances in the Euro Area," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 217-236, June.
    18. Servaas Storm & C.W.M. Naastepad, 2015. "NAIRU economics and the Eurozone crisis," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 843-877, November.
    19. Detzer, Daniel & Hein, Eckhard, 2014. "Financialisation and the financial and economic crises: The case of Germany," IPE Working Papers 44/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    20. Francesca Gambarotto & Stefano Solari, 2015. "The peripheralization of Southern European capitalism within the EMU," Review of International Political Economy, Taylor & Francis Journals, vol. 22(4), pages 788-812, August.
    21. Paternesi Meloni, Walter, 2016. "Austerity and competitiveness in the Eurozone: a misleading linkage," MPRA Paper 75962, University Library of Munich, Germany.
    22. Heinze, Henriette, 2018. "The determinants of German exports: An analysis of intra- and extra-EMU trade," IPE Working Papers 95/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    23. Francesco Crespi & Dario Guarascio, 2017. "The demand-pull effect of public procurement on innovation and industrial renewal," LEM Papers Series 2017/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    24. repec:liu:liucej:v:14:y:2017:i:1:p:39-58 is not listed on IDEAS
    25. Dario Guarascio & Annamaria Simonazzi, 2016. "A polarized country in a polarized Europe: an industrial policy for Italy’s renaissance," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(3), pages 315-322, September.

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