Suchergebnisse

From Crisis to «Europe»? The Past and the Future in History and Political Economy I comment on six reviews of my book, Gekaufte Zeit, as published in the last issue of the Journal of Modern European History. My subjects are: how to write the history of a loss while avoiding being accused of «nostalgia»; how to take into account structure, agency and contingency when dealing with processes of patterned historical development and institutional change; how the «crisis of the tax state» might be related to the capitalist class conflict; why the crisis of the European Monetary Union will probably be with us for a long time to come, and why certain proposed solutions are not solutions at all; and what is to be made of the idea of a de-nationalized Pan-European democracy as a practical answer to that crisis.

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics ; The inception of the European Monetary Union appeared to have accomplished the yields' convergence goal of Maastricht. Suddenly however, spreads against Germany started escalating towards the values of the early nineties. Through the usage of a fixed-effects Arellano-Bond dynamic panel estimation, this thesis tries to discern the role of liquidity and fiscal fundamentals in determining yield differentials for ten EMU countries. While markets tend to monitor high debtors via more structural fiscal measures, a late and abrupt reaction, as risk perceptions increased, unveiled the unannounced fiscal unsoundness of the peripheral. The consequent defaults will put into question the credibility of the Stability and Growth Pact. In this context, unobserved individual effects seem to be the least of our concerns.

Without a lender of last resort financial stability is not possible and
systemic financial crises get out of control. During and after the Great
Recession the US Federal Reserve System (Fed) and the European Central Bank
(ECB) took on the role of lender of last resort in a comprehensive way. The
Fed stabilised the financial system, including the shadow banking system.
However, the chance to fundamentally restructure the financial system was
not used. The ECB was confronted with sovereign debt crises and an
incomplete integration of the European Monetary Union (EMU). It followed a
kind of ?muddling through? to keep the Euro area together. In the EMU not
only a fundamental restructuring of the financial system is needed but also
a deeper economic and political integration. The Fed and the ECB both were
the most important institutions to avoid repetition of the 1930s.

The European sovereign-debt crisis began in Greece when the government announced in December, 2009, that its debt reached 121% of GDP (or 300 billion euros) and its 2009 budget deficit was 12.7% of GDP, four times the level allowed by the Maastricht Treaty. The Greek crisis soon spread to other Economic and Monetary Union (EMU) countries, notably Ireland, Portugal, Spain and Italy. Using quarterly data for the 2000–2011 period, we implement a panel-vector autoregressive (PVAR) model for 11 EMU countries to examine the extent to which a rise in a country's bond-yield spread or debt-to-GDP ratio affects another EMU countries' fiscal and macroeconomic outcomes. To distinguish between interdependence and contagion among EMU countries, we compare results obtained for the pre-crisis period (2000–2007) with the crisis period (2008–2011) and control for global risk aversion.

The European sovereign-debt crisis began in Greece when the government announced in December, 2009, that its debt reached 121% of GDP (or 300 billion euros) and its 2009 budget deficit was 12.7% of GDP, four times the level allowed by the Maastricht Treaty. The Greek crisis soon spread to other Economic and Monetary Union (EMU) countries, notably Ireland, Portugal, Spain and Italy. Using quarterly data for the 2000–2011 period, we implement a panel-vector autoregressive (PVAR) model for 11 EMU countries to examine the extent to which a rise in a country's bond-yield spread or debt-to-GDP ratio affects another EMU countries' fiscal and macroeconomic outcomes. To distinguish between interdependence and contagion among EMU countries, we compare results obtained for the pre-crisis period (2000–2007) with the crisis period (2008–2011) and control for global risk aversion.

We study how excessive debt-GDP ratios affect political sustainability of prudent fiscal policy in country members of a monetary union. We develop a model with free choice of distinct rent-seeking groups to cooperate (or not) in providing public goods, in seeking rents, and in austere debt issuing through international markets. Noncooperation of rent-seeking groups on fiscal prudence triggers collective fiscal impatience: fiscal debt is issued excessively because each group expropriates extra rents before other groups do so, too. Such collective fiscal impatience leads to a vicious circle of high international interest rates and external-debt default. Our calibration suggests that debt-GDP ratios below 137% foster cooperation among rent-seeking groups, which avoids collective fiscal impatience and default. Our analysis helps in understanding the politicoeconomic sustainability of sovereign rescue packages, emphasizing the need for fiscal targets and for possible debt haircuts.

The 2010 European debt crisis has revived the discussion concerning the optimum adjustment strategy in the face of asymmetric shocks. Whereas Mundell's (1961) seminal theory on optimum currency areas suggests depreciation in the face of crisis, the most recent emergence of competitive depreciations, competitive interest rate cuts or currency wars questions the exchange rate as an adjustment tool to asymmetric economic development. This paper approaches the question from a theoretical perspective by confronting exchange rate based adjustment with crisis adjustment via price and wage cuts. Econometric estimations yield a negative impact of exchange rate flexibility/volatility on growth, which is found to be particularly strong for countries with asymmetric business cycles and during recessions. Based on these findings we support a further enlargement of the European Monetary Union and recommend more exchange rate stability for the rest of the world.

Europe entered a deflationary spiral this summer, ruining its countries' hopes of implementing ordered debt reduction strategies. But the moment of truth is fast approaching. Europeans will soon be paying the bill for the errors their leaders committed at the creation of monetary union and the euro, based on a top-down ideological model which paid little heed to real constraints. Europe is undoubtedly facing a massive economic crisis or even a depression, coupled with higher taxes and a significant fall in the standard of living. The best one can hope for is that the main institutional achievement of the European project-the single market-will not bend to the political headwinds that are sure to blow, and that the ordeal will be as short as it will be violent, clearing the way to a rapid return to a healthier growth path. Adapted from the source document.

Conventional accounts of the reemergence of social pacts in Western Europe argue they are a governmental response to economic pressures, in particular the requirements for joining the European Monetary Union (EMU). The authors analyze three case studies—the Netherlands, Ireland, and Austria— to illustrate the usefulness of an alternative explanation centering on electoral calculations by political parties in choosing pacts. Parties forge social pacts not only to deal with economic problems but also when they perceive them to be helpful in reducing the potential electoral costs of economic adjustment and wage policies. Alternatively, parties may forgo negotiations with social partners for electoral gain. The authors extend the analysis to seven additional countries to apply the analysis more broadly. By combining the separate literatures on political economy and party politics, they are able to shed new light on the dynamics of social pacts in Western Europe.

Germany the EMU and the Stability Pact by Elke THIEL The introduction of the euro represents great step in the direction of deeper European integration and success for Franco-German cooperation As we will see in this article the stability policy of the Economic and Monetary Union EMU constituted fundamental condition for the acceptance of the single currency in Germany One should not today replace the rules of the Stability and Growth Pact to which states are bound and which guarantees measure of budgetary discipline by general economic coordination undertaken ex ante and which does not in theory bind members of the EMU European states must take charge of their own economic modernisation with this constituting prerequisite for renewed growth and job crea tion As for the Eurogroup it is first and foremost more efficient external represen tation which will reinforce it

Literature on financial market liberalization focuses heavily on state activity in allocating preferential credit. I consider state activity in promoting nascent equity markets by asking why a state would create and promote a market in which the transaction costs are high, the potential rate of return is low, and firms are reluctant to list shares. I examine the case of the West African regional stock exchange and propose that the central bank for the West African Monetary Union created it to mediate the relationship between this region and the world economy. I propose that states and domestic markets act as complements rather than as rivals in some instances of bourse creation. Moreover, bourses in developing economies present a different set of relationships among states, public and private lending authorities, and market participants than their counterparts in more developed financial environments. This illuminates a need for further research in this area.

Britain and EMU, by Willem Buiter
The only real threats to the success and survival of EMU are the perception that the ECB lacks legitimacy. Lack of openness, transparency and accountability are built into the laws and operating procedures of the ECB. In a democratic polity, accountability is a prerequisite for the survival of Central Bank independence. Monetary union involves a transfer of national sovereignty to the supranational centre. The legitimacy of this transfer will depend on the effectiveness with which the European Parliament will exercise its constitutional duty of calling the ECB to account. The UK will join EMU as soon as the UK government can jump the hurdles to membership that it is, regrettably set for itself. There are costs both to the UK and to the current Euroland members of the UK not being an EMU member from the start.

Finanzplatz Deutschland : a National or European Response to Internationalization ?, by Jonathan Story
While German financial markets, and regulatory institutions have evolved at a sedate pace, since the early 1980s global financial markets hâve grown rapidly. The government's preference was to preside over incremental changes, while negotiating complex compromises within EU's internai market programme. There was no enthusiasm at ail for any « Big Bang » experiment that would compromise the delicate balance of domestic interests. Yet the internal market may only be achieved in financial markets by the introduction of a European as oppo-sed to a national corporate culture, allowing for equal rights for ail shareholders in the EU. Monetary union is likely to be followed, in Germany as in other member states, and sooner rather than later, by an unravelling of national cross-share-holding which stands as a business counterpart to a Europe of states, such as exists today.