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One-size-fits-some! Capitalist diversity, sectoral interests and monetary policy in the euro area

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  • Mattias Vermeiren

Abstract

In the comparative capitalism literature, the European Central Bank's (ECB's) ‘one-size-fits-none’ monetary policy played a key role in the widening of trade imbalances in the euro area (EA) by being overly restrictive for the region's coordinated market economies (CMEs) and overly expansionary for the region's mixed market economies (MMEs). According to this literature, wage setting institutions mediated how the ECB's monetary policy re-distributed resources between the traded and non-traded sectors in these varieties of capitalism. By examining three separate transmission channels of the ECB's monetary policies (wage and price setting in labor and product markets; nominal exchange rate of the euro; funding costs and bank credit), this paper goes beyond the traditional emphasis on wage setting institutions and draws attention to those institutions that underpin the non-price competitiveness of traded sectors. Overall, the paper explains how the institutional infrastructure of the CMEs bolstered the adaptability of their traded sectors to the ECB's single monetary policy and its three transmission mechanisms – both during the pre-crisis era of widening imbalances and the period of asymmetrical trade rebalancing since the outbreak of the euro crisis.

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  • Mattias Vermeiren, 2017. "One-size-fits-some! Capitalist diversity, sectoral interests and monetary policy in the euro area," Review of International Political Economy, Taylor & Francis Journals, vol. 24(6), pages 929-957, November.
    • Handle: RePEc:taf:rripxx:v:24:y:2017:i:6:p:929-957
    DOI: 10.1080/09692290.2017.1377628
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    References listed on IDEAS

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    1. Scharpf, Fritz W., 2016. "Forced structural convergence in the eurozone: Or a differentiated European monetary community," MPIfG Discussion Paper 16/15, Max Planck Institute for the Study of Societies.
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    3. Muellbauer, John & Geiger, Felix & Rupprecht, Manuel, 2016. "The housing market, household portfolios and the German consumer," Working Paper Series 1904, European Central Bank.
    4. Anke Hassel, 2014. "Adjustments in the Eurozone: Varieties of Capitalism and the Crisis in Southern Europe," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 6, London School of Economics / European Institute.
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    Cited by:

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    6. 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.
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    10. Fana, Marta & Villani, Davide, 2022. "Decomposing the Automotive Supply Chain: Employment, Value Added and Occupational Structure," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 407-419.

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