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Macroeconomic Imbalances and Structural Change in the EMU. WWWforEurope Working Paper No. 69

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  • Stefan Ederer
  • Peter Reschenhofer

Abstract

Macroeconomic imbalances in the EMU are at the heart of the current crisis. A widely popular explanation for the high current account deficits in the southern European countries is that they lack a large, competitive and export-oriented industrial sector. The paper tests the hypothesis that parts of the structural change which happened in the EU before 2008 were supported by the divergent unit labour cost developments in the EMU. We look into patterns of structural change and sectoral competitiveness in all EU member countries and assess their linkages by means of a descriptive analysis as well as through econometric estimations. Our results broadly support the hypothesis. Structural policies alone to foster new competitive export-oriented industries in southern Europe in order to reduce macroeconomic imbalances in the EMU would not be efficient without accompanying adjustments in relative labour costs.

Suggested Citation

  • Stefan Ederer & Peter Reschenhofer, 2014. "Macroeconomic Imbalances and Structural Change in the EMU. WWWforEurope Working Paper No. 69," WIFO Studies, WIFO, number 47506, April.
    • Handle: RePEc:wfo:wstudy:47506
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    References listed on IDEAS

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    1. Karl Aiginger, 2014. "Industrial Policy for a Sustainable Growth Path. WWWforEurope Policy Paper No. 13," WIFO Studies, WIFO, number 47261, February.
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    6. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    7. Stefan Ederer & Peter Reschenhofer, 2013. "Macroeconomic Imbalances in the EU. WWWforEurope Working Paper No. 42," WIFO Studies, WIFO, number 47017, February.
    8. Stefan Ederer & Peter Reschenhofer, 2014. "A Global Value Chain Analysis of Macroeconomic Imbalances in Europe. WWWforEurope Working Paper No. 67," WIFO Studies, WIFO, number 47500, February.
    9. Karl Aiginger, 2014. "Industrial Policy for a Sustainable Growth Path," WIFO Working Papers 469, WIFO.
    10. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives. WWWforEurope Working Paper No. 44," WIFO Studies, WIFO, number 47019, February.
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    Cited by:

    1. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition – Part I: Synthesis. WWWforEurope Deliverable No. 11," WIFO Studies, WIFO, number 58791, February.
    2. Ederer, Stefan & Reschenhofer, Peter, 2018. "Macroeconomic imbalances and structural change in the EMU," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 59-69.
    3. Stefan Ederer, 2015. "Macroeconomic Imbalances and Institutional Reforms in the EMU. WWWforEurope Working Paper No. 87," WIFO Studies, WIFO, number 57896, April.
    4. Stefan Ederer & Josef Baumgartner & Jürgen Bierbaumer-Polly & Serguei Kaniovski & Silvia Rocha-Akis & Gerhard Streicher, 2016. "Österreich 2025 – Privater Konsum und öffentliche Investitionen in Österreich," WIFO Studies, WIFO, number 59037, February.

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