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

Author

Listed:
  • Eloi Laurent

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Jacques Le Cacheux

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

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

  • Eloi Laurent & Jacques Le Cacheux, 2010. "The Irish Tiger and the German Frog: A Tale of Size and Growth in the Euro Area," SciencePo Working papers Main hal-01880265, HAL.
    • Handle: RePEc:hal:spmain:hal-01880265
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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.
    3. repec:ulb:ulbeco:2013/8112 is not listed on IDEAS
    4. André Sapir, 2006. "Globaliseringen och de europeiska sociala modellernas reformering," ULB Institutional Repository 2013/8118, ULB -- Universite Libre de Bruxelles.
    5. Hamada, Koichi, 1976. "A Strategic Analysis of Monetary Interdependence," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 677-700, August.
    6. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    7. repec:hal:spmain:info:hdl:2441/3531 is not listed on IDEAS
    8. 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.
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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/6146 is not listed on IDEAS
    2. 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," Post-Print hal-01053234, HAL.
    3. repec:spo:wpecon:info:hdl:2441/6146 is not listed on IDEAS
    4. 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).
    5. Jean-Paul Fitoussi & Eloi Laurent, 2009. "Macroeconomic and social policies in the EU 15: the last two decades," Working Papers hal-01066208, HAL.
    6. repec:spo:wpecon:info:hdl:2441/9717 is not listed on IDEAS
    7. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09h95chf5k8 is not listed on IDEAS
    8. repec:hal:wpspec:info:hdl:2441/9717 is not listed on IDEAS
    9. repec:hal:wpspec:info:hdl:2441/10049 is not listed on IDEAS
    10. 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.
    11. Eloi Laurent, 2008. "Economic consequences of the size of nations, 50 years on," Working Papers hal-00972823, HAL.
    12. repec:hal:spmain:info:hdl:2441/9717 is not listed on IDEAS
    13. 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.
    14. repec:spo:wpmain:info:hdl:2441/6146 is not listed on IDEAS
    15. repec:hal:wpspec:info:hdl:2441/6146 is not listed on IDEAS
    16. Mauro Napoletano & Jean-Luc Gaffard, 2009. "Country Size, Appropriate Policy, and Economic Performance: Some Evidence from OECD Countries," SciencePo Working papers Main hal-00973080, HAL.
    17. repec:spo:wpmain:info:hdl:2441/10049 is not listed on IDEAS
    18. repec:spo:wpmain:info:hdl:2441/9717 is not listed on IDEAS
    19. repec:hal:spmain:info:hdl:2441/10049 is not listed on IDEAS
    20. repec:spo:wpecon:info:hdl:2441/10049 is not listed on IDEAS
    21. repec:hal:spmain:info:hdl:2441/9769 is not listed on IDEAS
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    23. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09h95chf5k8 is not listed on IDEAS

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