How large will the slowdown be in the Eurozone and Germany?

The financial turmoil raises concern about the strength of the slowdown in Germany and the Eurozone. Even if the stock market seems to be on a recovery paths, the interesting questions for firms, households and policy is indeed how strong the recession might be.  Two recently published forecasts and policy analysis papers try to shed light on the issue.

Labour productivity growth in good old Germany: is Germany falling further behind?

by Ulrich Fritsche and Georg Erber The development of aggregate productivity growth — here proxied by hourly labour productivity — is one of the important indicators for sustainable economic growth for each country. According to the new growth theory, the medium term productivity increase is seen as a variable which mainly depends on human capital […]

Divergence in Europe: what measure, what for?

In a recent post, David Milleker discussed the results of Phillip d’Arvisenet on convergence in Europe which point to an increasing cyclical convergence (measured by strong correlation coeffocients) but an increasing divergence in trend growth rates. Milleker points to the high degree of divergence of economic sentiment and monetary indicators — both indicate high cyclical […]

Germany: The shadow side of the rocky reform road

In a recent post and in direct or indirect reply to a post by Michael Burda, I talked about the “rocky road to full employment” — borrowing a phrase from the neo-structuralist Lance Taylor. In short, neo-structuralist thinking in the spirit of Taylor describes economic development as an integrated process with a special focus on […]

Nullum crimen, nulla poena sine praevia lege poenali: A Reply to Ester Faia and Ignazio Angeloni

In a recent post, Ester Faia and Ignazio Angeloni express their astonishment about the fact that in an environment of low inflation rates, stable growth in a overwhelming number of countries, sound monetary and rapidly improving fiscal policies, market deregulation, globalization and — as as I personally would add — under the usage of these […]

Germany’s Rocky Road to Full Employment

The Austrian economist Joseph Schumpeter once wrote on Marx’ economic theory that “…Marx’ economic ideas are embedded into a variety of very hot (in German: “dampfende“) phrases which gives them a temperature which is far from the own temperature” (from “Kapitalismus, Sozialismus und Demokratie“, own translation). The same can be said about the structural reform […]

The German Turnaround: The reform story revisited, part II

(in cooperation with Sebastian Dullien) Today, the German tabloid “Bild” ran a story that a number of top German employer federations have written a joint memorandum warning the government of rolling back even parts of the “Agenda 2010” reforms enacted by the Schröder government. According to them, the recent upswing in German can at least […]