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The Irish Tiger and the German Frog: A Tale of Size and Growth in the Euro Area

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  • Éloi Laurent
  • Jacques Le Cacheux

Abstract

In this paper, we try to relate country size to economic performance in the Euro area, focusing on the second smallest Euro area country, Ireland, and the region's largest economy, Germany, from 1995 to 2005. In the institutional context of the EMU, we show that Ireland smallness was a major factor in its spectacular success, while the growth strategy of Germany was not in line with its size and thus produced poor overall results. We argue that while Ireland needs to rethink its growth strategy with the arrival of the Eastern small states in the EU and the Euro area, Germany's economic extraversion - choosing external competitiveness over domestic expansion and resorting to social and tax competition - could be re-oriented towards intensive domestic growth with benefits, not only for the country, but also for the Euro area as a whole.
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Suggested Citation

  • Éloi Laurent & Jacques Le Cacheux, 2007. "The Irish Tiger and the German Frog: A Tale of Size and Growth in the Euro Area," Documents de Travail de l'OFCE 2007-31, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:0731
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    References listed on IDEAS

    as
    1. André Sapir, 2006. "Globalization and the Reform of European Social Models," Journal of Common Market Studies, Wiley Blackwell, vol. 44(2), pages 369-390, June.
    2. Philippe Aghion & Ioana Marinescu, 2008. "Cyclical Budgetary Policy and Economic Growth: What Do We Learn from OECD Panel Data?," NBER Chapters, in: NBER Macroeconomics Annual 2007, Volume 22, pages 251-278, National Bureau of Economic Research, Inc.
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    7. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    8. André Sapir, 2006. "Globaliseringen och de europeiska sociala modellernas reformering," ULB Institutional Repository 2013/8118, ULB -- Universite Libre de Bruxelles.
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    3. Jean-Paul Fitoussi & Eloi Laurent, 2008. "North by Northwest: What’s Wrong with the French Model and How Can the Nordic Model Help," Documents de Travail de l'OFCE 2008-18, Observatoire Francais des Conjonctures Economiques (OFCE).
    4. repec:hal:wpspec:info:hdl:2441/9717 is not listed on IDEAS
    5. repec:hal:wpspec:info:hdl:2441/10049 is not listed on IDEAS
    6. Éloi Laurent & Jacques Le Cacheux, 2010. "Taille des pays et stratégies de croissance," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 171-190.
    7. Jean-Paul Fitoussi & Eloi Laurent, 2008. "North by Northwest: What's Wrong with the French Model and How Can the Nordic Model Help. The Nordic Model: Solutions for Continental Europe's Problems?", Center for European Studies, Harvard Uni," SciencePo Working papers Main hal-01053234, HAL.
    8. Luigi Bonatti & Andrea Fracasso, 2012. "A Germans� dilemma: save the euro or preserve their socio-economic model," Department of Economics Working Papers 1207, Department of Economics, University of Trento, Italia.
    9. repec:hal:wpspec:info:hdl:2441/6146 is not listed on IDEAS
    10. Mauro Napoletano & Jean-Luc Gaffard, 2009. "Country Size, Appropriate Policy, and Economic Performance: Some Evidence from OECD Countries," Documents de Travail de l'OFCE 2009-08, Observatoire Francais des Conjonctures Economiques (OFCE).
    11. repec:spo:wpmain:info:hdl:2441/10049 is not listed on IDEAS
    12. Eloi Laurent, 2008. "Economic consequences of the size of nations, 50 years on," SciencePo Working papers Main hal-00972823, HAL.
    13. repec:hal:spmain:info:hdl:2441/10049 is not listed on IDEAS
    14. Jean-Paul Fitoussi & Eloi Laurent, 2009. "Macroeconomic and social policies in the EU 15: the last two decades," SciencePo Working papers Main hal-01066208, HAL.
    15. repec:hal:spmain:info:hdl:2441/9769 is not listed on IDEAS
    16. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09h95chf5k8 is not listed on IDEAS
    17. repec:spo:wpecon:info:hdl:2441/9717 is not listed on IDEAS
    18. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09h95chf5k8 is not listed on IDEAS
    19. repec:hal:spmain:info:hdl:2441/9717 is not listed on IDEAS
    20. repec:spo:wpmain:info:hdl:2441/6146 is not listed on IDEAS
    21. repec:spo:wpmain:info:hdl:2441/9717 is not listed on IDEAS
    22. repec:spo:wpecon:info:hdl:2441/10049 is not listed on IDEAS
    23. repec:spo:wpmain:info:hdl:2441/9769 is not listed on IDEAS

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