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Is Europe disintegrating? Macroeconomic divergence, structural polarization, trade and fragility

Author

Listed:
  • Claudius Graebner

    () (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)

  • Philipp Heimberger

    (Vienna Institute for International Economic Studies)

  • Jakob Kapeller

    () (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)

  • Bernhard Schuetz

    (Department of Economics, Johannes Kepler University Linz)

Abstract

This paper analyses economic developments in the Eurozone over the period 1999-2016 by developing a theoretical framework that traces divergent path developments across Eurozone countries to the times before the financial crisis. We argue that macroeconomic divergence between core and periphery countries is driven by 'structural polarization' in industrial structures: the emergence of export-driven growth in the core and debt-driven growth in the periphery is linked to the micro level of technological capabilities and firm performance. Pushing for convergence within Europe requires the simultaneous implementation of three intertwined policy programs: coordinated macroprudential financial regulation, active industrial policies aiming at a catching-up process in terms of innovative activity and technological capabilities for firms in the European periphery, and progressive re-distributional policies.

Suggested Citation

  • Claudius Graebner & Philipp Heimberger & Jakob Kapeller & Bernhard Schuetz, 2017. "Is Europe disintegrating? Macroeconomic divergence, structural polarization, trade and fragility," ICAE Working Papers 64, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
  • Handle: RePEc:ico:wpaper:64
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    Cited by:

    1. Kapeller, Jakob & Gräbner, Claudius & Heimberger, Philipp, 2019. "Economic polarisation in Europe: Causes and policy options," ifso working paper series 5, University of Duisburg-Essen, Institute for Socio-Economics (ifso).
    2. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller & Bernhard Schütz, 2020. "Structural change in times of increasing openness: assessing path dependency in European economic integration," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1467-1495, November.
    3. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller, 2020. "Pandemic pushes polarisation: the Corona crisis and macroeconomic divergence in the Eurozone," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(3), pages 425-438, September.
    4. Botta, Alberto & Tippet, Ben, 2020. "The roots of a divided eurozone: rigid labour markets or asymmetric technology-macroeconomic regimes?," Greenwich Papers in Political Economy 30958, University of Greenwich, Greenwich Political Economy Research Centre.
    5. Claudius Graebner & Jakob Hafele, 2020. "The emergence of core-periphery structures in the European Union: a complexity perspective," ICAE Working Papers 113, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    6. Philipp Heimberger, 2018. "What Explains Austria’s Export Market Performance?," wiiw Working Papers 149, The Vienna Institute for International Economic Studies, wiiw.
    7. Karsten Kohler & Engelbert Stockhammer, 2020. "Growing differently? Financial cycles, austerity, and competitiveness in growth models since the Global Financial Crisis," Working Papers PKWP2008, Post Keynesian Economics Society (PKES).
    8. Julia Eder & Klemens Kaps, 2020. "Kann Protektionismus fortschrittlich sein?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 46(2), pages 175-208.
    9. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller & Bernhard Schütz, 2018. "Structural Change in Times of Increasing Openness," wiiw Working Papers 143, The Vienna Institute for International Economic Studies, wiiw.
    10. Davide Villani & Marta Fana, 2020. "Productive integration, economic recession and employment in Europe: an assessment based on vertically integrated sectors," JRC Working Papers on Labour, Education and Technology 2020-12, Joint Research Centre (Seville site).
    11. Riccardo Pariboni & Pasquale Tridico, 2020. "Structural change, institutions and the dynamics of labor productivity in Europe," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1275-1300, November.

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    More about this item

    Keywords

    Polarization; European Monetary Union; industrial policy; financial regulation; growth trajectories;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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