Exporting Assets: EMU and the Financial Drivers of European Macroeconomic Imbalances

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    European Economic and Monetary Union has fostered an unstable complementarity in European financial markets between the growth
    models favoured by European savers (in the northern ‘core’ of Germany and other exporting states) and its borrowers (in the debt-fuelled and demand-driven eurozone periphery, including countries like Greece and Ireland). In the 2000s, the result of this development was a sharp decrease in real interest rates across the eurozone periphery, leading to rapid but inflationary growth. This eroded the competitiveness of exporters in the European periphery, making them more reliant on capital
    inflows to pay for growing current account deficits. Those deficits became problematic after the disruption of eurozone financial markets beginning in 2008. The policy response to the crises has focused on reducing the competitiveness gap between the core and periphery – while overlooking the financial forces that contributed to those competitiveness differentials in the first place. Indeed, it is the fragile and perverse complementarity in
    eurozone financial markets – more than any external shock or competitiveness differences – that lies at the root of Europe’s ongoing crisis.
    Originele taal-2English
    Pagina's (van-tot)174-191
    Aantal pagina's18
    TijdschriftNew Political Economy
    Volume23
    Nummer van het tijdschrift2
    Vroegere onlinedatum12-sep-2017
    DOI's
    StatusPublished - 2018

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