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Adjustment within the Euro Area: Is it all about competitiveness?


  • Gros, Daniel


The key problem afflicting the eurozone today seems clear: the periphery experienced a large loss of competitiveness during the boom years. In order for these economies to recover, they must restore their competitiveness, ideally by increasing productivity. This contribution shows, however, that the story line is not that straightforward. The drivers of competitiveness might have been more macro than micro in nature. The relationship between productivity and competitiveness is sometimes the opposite of what one would expect; and the link between competitiveness and exports is also much weaker than generally believed. Daniel Gros is Director of CEPS. An earlier version of this paper was prepared for the 14th Munich Economic Summit on “Competitiveness and Innovation: The Quest for Best", co-organised by CESifo and the BMW Foundation Herbert Quandt, 21-22 May 2015, and published in CESifo Forum, Vol. 16 (3):18-25 ( He gratefully acknowledges useful comments and suggestions received from Stefano Micossi, who recently completed a related contribution to the “Rebooting Europe – Step 2” project organised by the Centre for Economic Policy Research (CEPR). CEPS has published this latter paper on its website as a companion piece to the present study (see “Balance-of-Payments Adjustment in the Eurozone”, CEPS Policy Brief No. 38, January 2016).

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  • Gros, Daniel, 2016. "Adjustment within the Euro Area: Is it all about competitiveness?," CEPS Papers 11260, Centre for European Policy Studies.
  • Handle: RePEc:eps:cepswp:11260

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    Cited by:

    1. Nora Albu & Heike Joebges & Rudolf Zwiener, 2018. "Increasing competitiveness at any price?," IMK Working Paper 192-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Marcin Bielecki & Michał Brzoza‐Brzezina & Marcin Kolasa & Krzysztof Makarski, 2019. "Could the Boom‐Bust in the Eurozone Periphery Have Been Prevented?," Journal of Common Market Studies, Wiley Blackwell, vol. 57(2), pages 336-352, March.
    3. Juan Carlos Cuestas & Javier Ordóñez & Karsten Staehr, 2019. "Unit labour costs and the dynamics of output and unemployment in the southern European crisis countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(3), pages 597-616, August.
    4. Álvarez López, M.ª Elisa & Vega Crespo, Josefa, 2017. "La fortaleza competitiva de la economía española/The Competitive Strength of the Spanish Economy," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 7-34, Enero.
    5. Kurt Bayer, 2018. "Which Structural Reforms Does E(M)U Need to Function Properly?," wiiw Policy Notes 28, The Vienna Institute for International Economic Studies, wiiw.
    6. Esposito, Piero & Messori, Marcello, 2016. "Improved Structural Competitiveness or Deep Recession? On the recent macroeconomic rebalances in the EMU," SEP Working Papers 2016/3, LUISS School of European Political Economy.

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