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The quantitative growth and increased social prominence of financial institutions and markets can be usefully seen in terms of the constraints or 'discipline' they impose on other private and public decision makers. The role of finance in allocating real resources may be less important than its role in supporting the claims and authority of wealth-owners vis-a-vis other social actors. This article discusses the political economy of financialization in the United States, Europe and India. In the United States, the latter role is most visible in the pressure non-financial corporations face to increase payouts to shareholders. In Europe, the financial constraints on national governments are more salient. Tightening these constraints is openly acknowledged as the major benefit of financial integration, yet, on the other hand, the constraints financialization imposes on policy may also limit the extent to which finance can in fact be liberalized. This countervailing pressure is visible in the great expansion of central banks' balance sheets and management of financial markets over the past decade. It is even more clearly visible in India, where the conflict between financialization and concrete policy goals has sharply limited the extent of liberalization, despite consistent rhetorical support.

We calibrate a closed multi-country input-output model with data from the World Input-Output Database to estimate the size of spillover effects of Germany’s final demand on GDP, employment, and the trade balance in Southern European countries. We find that spillover effects are rather small. Germany alone will hardly make a significant contribution to the external adjustment process in the European South.

We run simulations of current account rebalancing scenarios in the Euro Area and the European Union based on a closed multi-country input-output model. The spillover effects of domestic demand booms in the Northern European surplus countries are non-negligible, but not large. While they cannot on their own create a meaningful upswing in the former Southern European deficit countries, they could be an important element thereof. In particular, a Northern expansion can create the necessary policy space for a domestic demand-driven expansion in the European South by relaxing the balance of payments constraint. Then, a coordinated asymmetric expansion in the Euro Area could alleviate the unemployment crisis in the European South. Auf Grundlage der Simulationen eines geschlossenen multi-regionalen Input-Output Modells berechnen wir die Effekte einer Rückkehr zu ausgeglichenen Leistungsbilanzen im Euroraum und der Europäische Union. Die "Spillover-Effekte" von Expansionen der Nachfrage in den nordeuropäischen Überschussländern sind quantitativ nicht vernachlässigbar, aber nicht herausragend. Obwohl sie für sich genommen nicht ausreichen, um in den südeuropäischen Ökonomien einen nachhaltigen Aufschwung anzustoßen, könnten sie ein wichtiger Bestandteil eines solchen sein. Insbesondere kann die Expansion im Norden den notwendigen Spielraum für eine eigene Nachfragesteigerung im europäischen Süden schaffen, indem sie die Zahlungsbilanzbeschränkungen der Südländer durch eine Verbesserung der Handelsbilanz abschwächen. Insgesamt könnte eine solche koordinierte, aber asymmetrische Expansion im Euro-Raum die Krise im europäischen Süden wesentlich lindern.