The European debt crisis and fiscal reactions in Europe 2000–2014
In: International economics and economic policy, Band 13, Heft 2, S. 297-317
ISSN: 1612-4812
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In: International economics and economic policy, Band 13, Heft 2, S. 297-317
ISSN: 1612-4812
In: Journal of common market studies: JCMS, Band 53, Heft 3, S. 558-576
ISSN: 1468-5965
The Euro Plus Pact was approved by the European Union countries in March 2011. The pact stipulates various measures to strengthen competitiveness with the ultimate aim of preventing accumulation of unsustainable external imbalances. This article uses Granger causality tests to assess the short-term linkages between changes in relative unit labour costs and changes in the current account balance for the period 1995-2011. The main finding is that changes in the current account balance precede changes in relative unit labour costs, while there is no discernible effect in the opposite direction. This suggests that capital flows from the European core to the periphery contributed to the divergence in unit labour costs across Europe prior to the global financial crisis. The results also suggest that the measures to restrain unit labour costs may have only limited effect on the current account balance in the short term. Adapted from the source document.
In: Journal of common market studies: JCMS, Band 53, Heft 3, S. 558-576
ISSN: 0021-9886
In: Post-communist economies, Band 26, Heft 2, S. 257-276
ISSN: 1465-3958
The Euro Plus Pact was approved by 23 EU countries in March 2011 and came into force shortly afterwards. The Pact stipulates a range of quantitative targets meant to strengthen cost competitiveness with the aim of preventing the accumulation of external financial imbalances. This paper uses Granger causality tests and vector autoregressive models to assess the short-term linkages between changes in the relative unit labour cost and changes in the current account balance. The sample consists of annual data for 27 EU countries for the period 1995-2012. The main finding is that changes in the current account balance precedes changes in relative unit labour costs, while there is no discernible effect in the opposite direction. The divergence in unit labour costs between the countries in Northern Europe and the countries in Southern and Eastern Europe may thus partly be the result of capital flows from the core of Europe to the periphery prior to the global financial crisis. The results also suggest that the measures in the Euro Plus Pact to restrain the growth of unit labour costs may not affect the current account balance in the short term.
BASE
The Euro Plus Pact was approved by 23 EU countries in March 2011 and came into force shortly afterwards. The Pact stipulates a range of quantitative targets meant to strengthen cost competitiveness with the aim of preventing the accumulation of external financial imbalances. This paper uses Granger causality tests and vector autoregressive models to assess the short-term linkages between changes in the relative unit labour cost and changes in the current account balance. The sample consists of annual data for 27 EU countries for the period 1995-2012. The main finding is that changes in the current account balance precedes changes in relative unit labour costs, while there is no discernable effect in the opposite direction. The divergence in unit labour costs between the countries in Northern Europe and the countries in Southern and Eastern Europe may thus partly be the result of capital flows from the core of Europe to the periphery prior to the global financial crisis. The results also suggest that the measures in the Euro Plus Pact to restrain the growth of unit labour costs may not affect the current account balance in the short term.
BASE
In: ECB Working Paper No. 1650
SSRN
Working paper
After the global financial crisis, some governments in the EU experienced serious debt financing problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance by assessing the fiscal conduct in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data for the pre-crisis period 2001-2008 and for the post-crisis period 2009-2012. The pre-crisis estimations reveal some differences in persistence and cyclical reaction between different groups of countries, but generally little feedback from the debt stock to the primary balance. The countries that eventually developed fiscal problems do not stand out. The post-crisis estimations show less counter-cyclicality and much more feedback from the debt stock, and these reactions are particularly pronounced for the countries with severe fiscal problems.
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In: Eastern European economics: EEE, Band 51, Heft 1, S. 21-35
ISSN: 1557-9298
In: DIW Berlin Discussion Paper No. 1295
SSRN
Working paper
In: DIW Berlin Discussion Paper No. 1295
SSRN
Working paper
The Euro Plus Pact was approved by 23 EU countries in March 2011. The Pact stipulates a range of quantitative targets meant to strengthen competitiveness and convergence with the ultimate aim of preventing unsustainable financial imbalances from accumulating. This paper uses Granger causality tests and VAR models to assess the direction of causality between changes in the relative unit labour cost and the current account balance. The sample consists of the 27 EU countries for the period 1995-2011. The main finding is that changes in the current account balance affects changes in relative unit labour costs, while there is no discernable effect in the opposite direction. This suggests that the divergence in the unit labour cost between the core countries in Northern Europe and the countries in Southern and Central and Eastern Europe prior to the global financial crisis was partly the result of capital flows from the European core to the periphery. The results call into question the ability of the Euro Plus Pact to avert financial imbalances related to increasing current account deficits in future.
BASE
In: Discussions on Estonian Economic Policy: Theory and Practice of Economic Policy, Band 20, Heft 1
SSRN
In: IOS Working Paper No. 324, November 2012
SSRN
Working paper
In: Comparative economic studies, Band 52, Heft 4, S. 637-670
ISSN: 1478-3320