Labor market reform in Europe: where do we stand?

Labor markets have been at the core of Europe’s policy agenda for many years, particularly after the introduction of the euro. When exchange rates can no longer be adjusted, flexible labor markets are needed because they help face increasing competitive pressures and absorb external shocks associated with the globalization process. Europe is trying to respond […]

Forget about strong European growth performance in 2008

Among professional forecasters 2007 started on a very interesting note: Could EMU economies grow on uninterrupted from the slowdown in the USA? At least the standard indicators of economic confidence ranging from the EU Commission survey, the PMIs to ifo did suggest so. Furthermore, Germany did seem to have weathered the VAT shock surprisingly well. […]

Structural Reforms and the German Growth Recovery

I am delighted to get so much response to my first blog. I especially appreciate the comment from a reader who called for calm, rational discussion of the issue. In Germany, reforming social safety nets is hazardous business and people can get pretty upset! And especially when Wolfgang Münchau claims what I claim is nonsense, […]

Is Europe really that sclerotic: Lessons from recent IMF data

The general perception about the relative merits of the US economy on the one hand and the continental European economies on the other hand is simple: The US is a very dynamic economy which has been growing briskly over the past decade while Europe is sclerotic and always lagging behind. While markets in the US […]

EMU, inequality, and finance

Feelings of economic insecurity play an important role in slowing down the European integration process. In the early 2000s, Europeans were certainly troubled by the worldwide cyclical downswing, by competition from newly industrializing trading partners, by slow adoption of new technologies. But public opinion and voters in European Constitution referenda have found it easiest to […]

The German Turnaround: The reform story revisited, part III

in cooperation with Ulrich Fritsche Last Thursday, the leading German economic research institutes have published their semi-annual diagnosis of the state of the German economy. Similarly to Michael Burda’s post on RGE Monitor, they warn that the Grand Coalition must not fall into a “reform pause”. Just like Michael Burda, they credit part of the […]

euro: no free lunch for the outsiders

A few years ago, Andy Rose of the University of Berkeley started a whole literature on the effects of common currencies on trade. His message was that the effect was really large and this was interpreted as suggesting that the euro would also have a large effect on trade. The effect has since been downsized […]

German industry finally joins Europeans in concern over strong Euro

Ten days ago still, the German Finance Minister Peer Steinbrück stood in strong opposition to several of his Eurozone partners: during a meeting of the Eurogroup, some countries had raised strong concerns over the appreciation of the Euro, backed by their industry. The German government took a relaxed position on this matter, arguing both that […]

Italian Passions, Politics and Economics: Mr Veltroni Hard Choice

Passions… Political passions are running high these days in Italy. After a new wave of revelations concerning recent “financial scandals” (Antonveneta Bank, Banca Nazionale del Lavoro, Rizzoli Corriere della Sera), the outrage of public opinion against the political “class” (or “caste”, according to a recent best-seller) has reached heights comparable to the era of “Mani […]