IDEAS home Printed from https://ideas.repec.org/p/ces/econpb/_2.html
   My bibliography  Save this paper

Why are Macroeconomic Imbalances so Important for the European Monetary Union?

Author

Listed:
  • Roberto Tamborini

Abstract

According to a well established view of the crisis in the European Monetary Union (EMU), its seeds were planted well before the world financial collapse of 2007-08 and the subsequent Great Recession. The seeds, "macroeconomic imbalances" in the Brussels language, lie in the lack of real convergence across member countries. The idea is that as long as countries are on divergent trajectories of growth of GDP, productivity and incomes, 1) large and unsustainable current account imbalances will also emerge, 2) the ensuing capital movements may suddenly stop triggering bank and financial crises, 3) national fiscal policies will also be put under pressure by the need to bailout faltering banking systems while countries on a low growth path will also face harder convergence towards the 60% debt target, with higher interest rates and heavier fiscal effort.The Commission is entirely devoted to pro-growth and convergence policies, and the surveillance on macroeconomic imbalances figures prominently among the new tools of European governance. Prof. Roberto Tamborini, Department of Economics and Management of the University Trento (UdT is a network partner of EconPol Europe), says: "Formalising the convergence process is an important goal in the road map towards the completion of Europe's Economic and Monetary Union. Higher growth across Europe is of course a valuable aim. But are convergent, tendentially uniform, growth rates really a sine-qua-non condition in a monetary union? Is there any economic tendency towards this outcome? Are, otherwise, such calamities as 1), 2), and 3) inevitable?"

Suggested Citation

  • Roberto Tamborini, 2017. "Why are Macroeconomic Imbalances so Important for the European Monetary Union?," EconPol Policy Brief 2, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_2
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/EconPol_Policy_Brief_2_2017_Macroeconomic_Imbalances.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    2. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    3. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
    4. Zsolt Darvas & Guntram B. Wolff, 2014. "So far apart and yet so close- Should the ECB care about inflation differentials?," Policy Contributions 848, Bruegel.
    5. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, vol. 106(437), pages 1037-1044, July.
    6. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
    7. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roberto Tamborini, 2017. "Why are Macroeconomic Imbalances so Important for the European Monetary Union?," EconPol Policy Brief 02, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Gokan, Yoichi, 2003. "The speed of convergence and alternative government financing," Journal of Economic Dynamics and Control, Elsevier, vol. 27(9), pages 1517-1531, July.
    3. Adriana Di Liberto & Francesco Pigliaru & Roberto Mura, 2008. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 343-368, April.
    4. Stephen Dobson & Carlyn Ramlogan & Eric Strobl, 2006. "Why Do Rates Of Β‐Convergence Differ? A Meta‐Regression Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 153-173, May.
    5. Roberto Tamborini, 2013. "The new fiscal rules for the EMU. Threats from heterogeneity and interdependence," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(3), pages 415-436, December.
    6. Chatterjee, Santanu, 2005. "Capital utilization, economic growth and convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 29(12), pages 2093-2124, December.
    7. Warwick J. McKibbin & David Pearce & Alison Stagman, 2004. "Long Run Projections for Climate Change Scenarios," Economics and Environment Network Working Papers 0405, Australian National University, Economics and Environment Network.
    8. Gerson Javier Perez & Peter Rowland, 2004. "Regional economic policies. Four country cases," Colombian Economic Journal, Academia Colombiana de Ciencias Economicas, Colegio Mayor de Nuestra Senora del Rosario, Pontificia Universidad Javeriana, Universidad de Antioquia, Universidad de los Andes, Universidad del Valle, Universidad Externado de Colombia, Universidad Nacional de Colombia, vol. 2(1), pages 81-120, November.
    9. Coulombe, Serge & Lee, Frank C., 1998. "Évolution à long terme de la convergence régionale au Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(1), pages 5-27, mars.
    10. Francesco Quatraro, 2006. "Mind the Gap: Convergence of Technology and Technology of Convergence in Italian Regions, 1982-2001," ERSA conference papers ersa06p831, European Regional Science Association.
    11. Cetorelli, Nicola, 2002. "Could Prometheus be bound again? A contribution to the convergence controversy," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 29-50, November.
    12. Rubina Vohra, 1998. "Convergence (divergence) and the U.S. states," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(4), pages 372-378, December.
    13. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(3), pages 237-270, September.
    14. Massimiliano Affinito, 2011. "Convergence clubs, the euro-area rank and the relationship between banking and real convergence," Temi di discussione (Economic working papers) 809, Bank of Italy, Economic Research and International Relations Area.
    15. Diana Gutiérrez Posada & Fernando Rubiera Morollón & Ana Viñuela, 2018. "Ageing Places in an Ageing Country: The Local Dynamics of the Elderly Population in Spain," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 109(3), pages 332-349, July.
    16. Delgado Narro, Augusto Ricardo, 2020. "The Process of Convergence among the Japanese Prefectures: 1955 - 2012," MPRA Paper 100361, University Library of Munich, Germany.
    17. Massimo Cingolani, 2015. "Sylos Labini su Marx: implicazioni per la politica economica (Sylos Labini on Marx: economic policy implications)," Moneta e Credito, Economia civile, vol. 68(269), pages 81-147.
    18. Persson, Joakim, 1997. "Convergence across the Swedish counties, 1911-1993," European Economic Review, Elsevier, vol. 41(9), pages 1835-1852, December.
    19. Serrano, Guadalupe & Cabrer, Bernardí, 2000. "Technological "Catch-Up" And Trade Flows. A Panel Data Approach," ERSA conference papers ersa00p152, European Regional Science Association.
    20. Mark J. Holmes, 2005. "Is Long-Run Output Convergence Associated With International Cooperation? Some New Evidence For Selected African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 67-85, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:econpb:_2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.