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Pandemic pushes polarisation: The Corona crisis and macroeconomic divergence in the Eurozone

Author

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  • Jakob Kapeller

    (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)

  • Claudius Graebner

    (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; ZOE Institute for future-fit Economies, Bonn, Germany)

  • Philipp Heimberger

    (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Vienna Institute for International Economic Studies (wiiw), Vienna, Austria)

Abstract

This paper discusses the uneven consequences of the macroeconomic fallout from the coronavirus and related economic policy responses against the background of an analysis of longer-term macroeconomic divergence in the Eurozone. We show that the macroeconomic impact of the Corona crisis is estimated to be more severe in Southern Eurozone countries than in Northern Eurozone countries, which further reinforces the tendency of an increasing economic polarisation. This polarisation process can be traced back to existing differences in production structures and uneven vulnerabilities of the underlying growth models. As a consequence, any policy response to the Corona crisis that does not take the deeper problems of structural polarisation into account will suffer from limited impact in the medium to long run.

Suggested Citation

  • Jakob Kapeller & Claudius Graebner & Philipp Heimberger, 2020. "Pandemic pushes polarisation: The Corona crisis and macroeconomic divergence in the Eurozone," ICAE Working Papers 106, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    • Handle: RePEc:ico:wpaper:106
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    References listed on IDEAS

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    1. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller & Bernhard Schütz, 2017. "Is Europe disintegrating? Macroeconomic divergence, structural polarization, trade and fragility," Economics working papers 2017-15, Department of Economics, Johannes Kepler University Linz, Austria.
    2. 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 Socioeconomics (ifso).
    3. 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.
    4. Philipp Heimberger & Jakob Kapeller, 2017. "The performativity of potential output: pro-cyclicality and path dependency in coordinating European fiscal policies," Review of International Political Economy, Taylor & Francis Journals, vol. 24(5), pages 904-928, September.
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    13. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller, 2019. "Economic Polarisation in Europe: Causes and Options for Action," wiiw Research Reports 440, The Vienna Institute for International Economic Studies, wiiw.
    14. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(3), pages 653-675.
    15. Claudius Gräbner & Philipp Heimberger & Jakob Kapeller & Bernhard Schütz, 2020. "Is the Eurozone disintegrating? Macroeconomic divergence, structural polarisation, trade and fragility," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(3), pages 647-669.
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    Cited by:

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    2. Michael Dauderstädt, 2022. "International Inequality and the COVID-19 Pandemic," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(1), pages 40-46, January.
    3. RADU Maria-Tatiana & RĂDULESCU Magdalena & PENTESCU Alma & MARINOV Georgi & KHARLAMOVA Ganna, 2023. "The Effects of Immigration and Unemployment on European Countries: A Comparative Social and Fiscal Perspective," European Journal of Interdisciplinary Studies, Bucharest Economic Academy, issue 02, June.
    4. Gräbner, Claudius & Hafele, Jakob, 2020. "The emergence of core-periphery structures in the European Union: A complexity perspective," ZOE Discussion Papers 6, ZOE. institute for future-fit economies, Bonn.
    5. Davide Villani & Marta Fana, 2021. "Productive integration, economic recession and employment in Europe: an assessment based on vertically integrated sectors," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(2), pages 137-157, June.
    6. Fontana, Giuseppe & Kamara, Mohamed Sheriff Hamid, 2023. "Towards monetary union in the Economic Community of West African States (ECOWAS): Better policy harmonisation and greater intra-trade are needed," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 58-73.
    7. Adriana Grenčíková & Valentinas Navickas & Marcel Kordoš & Matej Húževka, 2021. "Slovak business environment development under the industry 4.0 and global pandemic outbreak issues," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(4), pages 164-179, June.
    8. Josef Abrhám & Milan Vošta, 2022. "Impact of the COVID-19 Pandemic on EU Convergence," JRFM, MDPI, vol. 15(9), pages 1-14, August.
    9. Vytautas Kuokštis & Ringailė Kuokštytė, 2023. "How Institutions Moderated the Pandemic's Economic Impact in EU Member States," Journal of Common Market Studies, Wiley Blackwell, vol. 61(2), pages 503-525, March.

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    More about this item

    Keywords

    Polarisation; Coronavirus; Eurozone;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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