Articles on Issue Theme
Lucian CROITORU
Banca Naţională a României
In this study, we show that the main problem facing the Eurozone economy is the relatively low competitiveness of the PIIGS economies compared with other economies in the region. Findings show that the defining trait of PIIGS countries is neither budget deficits, nor public debt, but rather the current account deficits. The politicians’ initial assumption that joining the Eurozone would lead to the convergence of productivity trends failed to materialize. We argue that, while tightening fiscal discipline within the Eurozone is a must, it does not solve the problem of the lack of competitiveness. Adopting rules on capping structural deficits at around 0.5 percent of GDP might prove premature, given the private sector deleveraging process. We reveal the solutions that help exit the crisis without deepening the recession. Among them, a weaker euro would buy time for countries facing a competitiveness deficit to implement far-reaching structural reforms conducive to higher labor productivity. The European Central Bank’s quantitative easing is compatible with this solution.
ŒCONOMICA no. 3/2012
Keywords: competitiveness, productivity, current account deficit, crisis, recession, quantitative easing, Eurozone
JEL: E58, F32, G28, H61, H62, H63, H81, J01
Zona Euro: un adevăr care nu convine
Select Issue:
Archive
Octavian-Dragomir JORA
Academia de Studii Economice din Bucureşti
Mara Andreea TUDOR
University of Chicago
Cătălin MURARAŞU
Academia de Studii Economice din Bucureşti
Ramona Iulia DIEACONESCU
Academia de Studii Economice din Bucureşti
Maria GHEORGHE (NIŢU)
Academia de Studii Economice din Bucureşti
Sorin-Nicolae CURCĂ
Academia Română
Revista ŒCONOMICA
Authors
