Austerity, Growth and Inflation. Remarks on the Eurozone's Unresolved Competitiveness Problem
While the financial protection measures enacted by the ECB and the community of Eurozone members have calmed financial markets, they have left the competitiveness problem of the Eurozoneâ€™s southern countries and France unresolved. The paper compares price inflation before the crisis with the necessary and actual price cuts that have taken place since the outbreak of the crisis, predicting a decade of stagnation for the south and inflation for the north. Keynesian demand policy is counterproductive in the south and unnecessary in the north. The necessary realignment of relative goods prices and current account imbalances can be achieved if market forces are allowed to redirect capital flows to the north instead of being artificially steered to uses they are keen to avoid.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
References listed on IDEAS
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.:
- Hans-Werner Sinn & Timo Wollmershäuser, 2012.
"Target loans, current account balances and capital flows: the ECB’s rescue facility,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
- Hans-Werner Sinn & Timo Wollmershaeuser, 2011. "Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility," NBER Working Papers 17626, National Bureau of Economic Research, Inc.
- Sinn, Hans-Werner & Wollmershäuser, Timo, 2012. "Target loans, current account balances and capital flows: The ECB’s rescue facility," Munich Reprints in Economics 19556, University of Munich, Department of Economics.
- Buti,Marco & Deroose,Servaas & Gaspar,Vitor & Martins,JoÃ£o Nogueira (ed.), 2010. "The Euro," Cambridge Books, Cambridge University Press, number 9789279098420, October.
- Hans-Werner Sinn & Robert Koll, 2000. "The Euro, Interest Rates and European Economic Growth," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(3), pages 30-31, October.
- Hans-Werner Sinn, 2015. "Die griechische TragÃ¶die," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68, pages 03-33, 05.
- Hans-Werner Sinn & Timo WollmershÃ¤user, 2012. "Target Balances and the German Financial Account in Light of the European Balance-of-Payments Crisis," CESifo Working Paper Series 4051, CESifo Group Munich.
- Hans-Werner Sinn, 2010. "Rescuing Europe," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(SPECIALIS), pages 1-22, 08. Full references (including those not matched with items on IDEAS)