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Macroeconomic Imbalances and Structural Change in the EMU

Listed author(s):
  • Stefan Ederer
  • Peter Reschenhofer

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 descripitve 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.

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File URL: http://www.foreurope.eu/fileadmin/documents/pdf/Workingpapers/WWWforEurope_WPS_no069_MS222.pdf
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Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 69.

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Length: 45
Date of creation: Oct 2014
Publication status: published
Handle: RePEc:feu:wfewop:y:2014:m:10:d:0:i:69
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Order Information: Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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  1. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  2. Stefan Ederer & Peter Reschenhofer, 2013. "Macroeconomic Imbalances in the EU," WWWforEurope Working Papers series 42, WWWforEurope.
  3. Marcel Timmer & Abdul A. Erumban & Reitze Gouma & Bart Los & Umed Temurshoev & Gaaitzen J. de Vries & I–aki Arto & Valeria Andreoni AurŽlien Genty & Frederik Neuwahl & JosŽ M. Rueda?Cantuche & Joseph , 2012. "The World Input-Output Database (WIOD): Contents, Sources and Methods," IIDE Discussion Papers 20120401, Institue for International and Development Economics.
  4. Karl Aiginger, 2014. "Industrial Policy for a Sustainable Growth Path," WIFO Working Papers 469, WIFO.
  5. 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.
  6. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.
  7. Stefan Ederer & Peter Reschenhofer, 2014. "A global value chain analysis of macroeconomic imbalances in Europe," WWWforEurope Working Papers series 67, WWWforEurope.
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