Skip to main content

Research Repository

Advanced Search

Nothing learned from the crisis? Some remarks on the stability programmes 2011–2014 of the Euro area governments

Semieniuk, Gregor; van Treeck, Till; Truger, Achim

Authors

Gregor Semieniuk

Till van Treeck

Achim Truger



Contributors

Jesper Jespersen
Editor

Mogens Madsen
Editor

Abstract

In this chapter, we argue that the projections for achieving stability in the current Stability Programmes (SPs) of Euro zone member countries are very likely too optimistic.2 We aver that by ignoring the importance of external rebalancing and assuming an overly buoyant world economy, the SPs either forecast unrealistic growth rates or unrealistically successful fiscal consolidation. Towards this, we examine the interrelated- ness of public deficit reduction and external imbalances reduction. We derive our argument mainly from evaluating the SPs against the logic of simple accounting identities, which clarify the connections of financial balances and thereby of the two challenges. Thus we transcend the SPs’ narrow focus only on the government balance, and shed light instead on the SPs’ projections of the financial balances of all three sectors in the economy (foreign, private and public) and how they are intertwined with the overall macroeconomic development. Merely the final brief sketch of feasible alternative policy recommendations to address both challenges (sustainability of public deficits and current account positions) requires a greater sophistication of the economic argument and thus involves more judgment.

Citation

Semieniuk, G., van Treeck, T., & Truger, A. (2012). Nothing learned from the crisis? Some remarks on the stability programmes 2011–2014 of the Euro area governments. In J. Jespersen, & M. Madsen (Eds.), Keynes’s General Theory for Today (186-206). Edward Elgar Publishing. https://doi.org/10.4337/9781781009529.00019

Publication Date Jan 1, 2012
Deposit Date May 18, 2017
Publicly Available Date May 18, 2017
Publisher Edward Elgar Publishing
Pages 186-206
Book Title Keynes’s General Theory for Today
ISBN 9781781009529
DOI https://doi.org/10.4337/9781781009529.00019
Keywords Economics and Finance; macroeconomic imbalances
Publisher URL http://EconPapers.repec.org/RePEc:elg:eechap:15049_11

Files





Downloadable Citations