Search

The asymmetric level of integration within the European Union (EU) regarding membership in the European Monetary Union (EMU) has resulted in inconsistent responses to crises such as the Great Recession of 2007–2009 and the European sovereign debt crisis of 2010–2013. Furthermore, it has led to varying outcomes of monetary and fiscal policies implemented across EU countries. This paper aims to investigate the impact of monetary and fiscal policies on economic development and employment through the inflation channel in the EU between 2007 and 2015, using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that the outcomes of monetary policy have been mixed between EMU and non-EMU countries, resulting in different measures and negative spillover effects of the European Central Bank’s (ECB) policy on countries outside of the EMU. Meanwhile, the ability of fiscal policy to lower inflation and boost economic growth and employment has been limited, which means that the impact of fiscal policy on both economic development and employment and inflation has been minor. Based on the findings of this study, there should be better coordination of monetary and fiscal policies at the EU level to support the macroeconomic stability of the Union during times of crisis.

How crises-proof is really the EU and what can be done to improve its crisis management capabilities? The first thematic block of this volume is titled States in Crises and it primarily focuses on the EU and how its architecture and policies could be made more efficient, resilient and democratic. Complementarily, the second thematic block Markets in Transition bring more sector-specific stories. In the past, crises were often stimulative for the promotion of EU integration. However, it would be naive to conclude that more crises will lead to more integration, especially if they will take the asymmetric form, hitting some parts of the Union different than the rest. Some relatively recent crises. such as the EU’s financial crisis led to new and reinforced architecture in the form of banking union, notwithstanding additional work that needs to be done. Other crises with more asymmetric effects, such as the migration crisis, are still lingering in the absence of an agreement on how to best tackle it together. Overcoming crises requires solidarity and the best way to ensure it among member states is to identify enlightened self-interest and see how it is tightly intervowen with mutual interdependence. Sooner or later, rising global interconnectedness and rapidly changing environment makes somebody else’s problem your problem. Therefore, preventing excessive concentration of power at the higher levels of hierarchy while at the same time being able to pool joint resources when it is reasonable to expect that common efforts add value is a golden formula. To provide a fresh example, letting European Commission issue new bonds in the context of current energy crisis would set a bad legal precedent and represent a pro-cyclical fiscal policy. On the other hand member states’ reluctance to embrace some degree of resource pooling for strictly supporting the provision of EU-wide public goods would be equally bad. Overall, there are ten interesting and complementary contributions in this issue, despite authors’ diverse academic and professional backgrounds. Hence, in the next couple of pages I will try to do justice to each of the contribution and distil their key ideas and arguments. For the sake of clarity and coherence, they will be divided into three sections: Reforming the EMU, Agriculture-Climate-Energy Nexus and Industrial Policy, Technology and the Geopolitics of Standard-Setting. Hopefully, readers will enjoy all ten contributions, broaden their horizons and leverage authors’ ideas in their academic, professional and civic endeavours.

The topic of the Intereconomics/CEPS conference for which this paper was written was framed as a question: convergence or divergence in the EU? I am prepared to give an unambiguous answer. That answer is yes.

Kasvavaa suosiota nauttiva moderni rahateoria (Modern Monetary Theory, MMT) on eurooppalaisessa keskustelussa toistaiseksi herättänyt innostusta enimmäkseen yhteisvaluutta euron ja Euroopan unionin ”liittovaltiokehityksen” vastustajissa. MMT:n pohjalta esitetty talouskurikritiikki on ollut voittopuolisesti euroskeptistä laatua. Tämä puheenvuoro esittää, että MMT:n talousteoreettisten näkökohtien valossa tämä on itse asiassa hyvinkin nurinkurista – teoria tarjoaa erinomaisia perusteita nimenomaan eurooppalaisen elvytyksen ja syvän talouspoliittisen yhdentymisen puolesta. Yleisemminkin MMT:n opetukset soveltuvat kansallisvaltioita suoremmin valtioiden välisiin fiskaaliunioneihin, joissa kulutus- ja verotuspäätökset tehdään koordinoidusti. Puheenvuoro pohjautuu Konsta Kotilaisen Global Society -lehdessä maaliskuussa 2021 julkaistuun artikkeliin modernin rahateorian kosmopolitanistisesta tulkinnasta.

This paper investigates the monetary autonomy of Central Eastern and South Eastern European countries with the Euro area. These countries are European Union Member States that have not adopted yet the Euro single currency. Despite high degree of convergence as measured by Maastricht criteria, four of them do no plan to enter the Euro area soon. We therefore assess monetary autonomy of these countries over the long run through the use of a multivariate cointegration methodology with structural breaks (Johansen et al., 2000). This methodology allows us to capture the multidimensional aspects of monetary autonomy in the context of nominal convergence in the Economic and Monetary Union, by including both domestic and Euro area variables into the system (policy rates, inflation rates, exchange rate). It also enables us to exploit all information contained in the macroeconomic series of these countries, for which broken economic history translates into non-stationary time series with breaks. Our empirical results suggest that modelling structural breaks changes the number and/or nature of cointegrating relations between our variables compared to the standard error correction model without breaks. With this modelling, we find monetary policy spillover from the Euro area to Bulgaria, the Czech Republic, Hungary and Romania. The inclusion of Euro area inflation to our baseline model enriches the cointegrating relations for the Czech Republic and Bulgaria. Poland is found to be the most monetary-independent country of our study across the various models estimated. On the other hand, Romania's monetary interdependence with Euro area is better modelled without taking into account any structural break., La motivation de ce papier est de comprendre les interdépendances existant entre les politiques monétaires conventionnelles menées par les pays CESEE membres de l'Union Européenne et par la zone Euro. Elles sont théoriquement renforcées par la convergence nominale à l’œuvre dans ces pays (et telle que mesurée par certains critères de Maastricht) et les trilemme et dilemme de politique monétaire. Pour autant, les pays CESEE en régime de change flottant ne sont pas candidats à l’adhésion au Mécanisme de Change Européen II, dernier stade du processus d’adhésion à l’Euro. La question de recherche posée se rapporte ainsi au degré d’autonomie des politiques monétaires domestiques par rapport à la zone Euro. La principale contribution de ce papier est de proposer une analyse de cointégration multivariée par pays des variables de politique monétaire domestique (augmentées des variables monétaires de la zone Euro et du taux de change), robuste aux ruptures structurelles caractéristiques des séries macroéconomiques de ces économie en transition. Nos résultats confirment la pertinence de cette modélisation à ruptures pour la Bulgarie, la Hongrie et la République Tchèque. Le degré de dépendance monétaire est lié aux régimes de change, sans que cela soit vérifié pour la Croatie. La Pologne est le pays le plus autonome monétairement sur longue période et l'interdépendance entre la Roumanie et la zone Euro est mieux modélisée sans prendre en compte de rupture structurelle.

This thesis concerns itself with the creation of the EMU and the Greek membership of it. The thesis is theoretically based in liberal intergovernmentalism, as this theory is advantageous to both the problem area and the methods employed. Liberal intergovernmentalism is uniquely suited to analyze large integrational projects at the treaty level, and the formal, straight-forwardness and structured setup allows for a multitude of sources to be used. It is also a posi-tivist, critical rationalist theory, which allows for a hands-off gathering and use of sources, and to better fit the historical nature of the study. The thesis uses a systematic review to synthesize the vast existing academic literature into a lib-eral intergovernmental framework. The systematic review shows a strong bias for Germany in the creation of the EMU, as Germany’s preferences of sound money and a strong technical side of the EMU was carried through to the final product. Furthermore, Germany had a leading role in the negotiations, which, along with their much-supported preference of sound monetary and fiscal policies, allowed them to create an EMU, which holds many of the features Germany sought to implement. Ultimately though, diverging preferences also helped create an uneven framework of the EMU, wherein juxtaposed abilities and limitations of the EU were apparent. The framework of the EMU created a centralized monetary policy in the form of the ECB, but left the fiscal policies to be decided and conducted by member-states. It also set up a surveil-lance system which solely relied on the member-states information.The unilateral member-state reporting to the surveillance program proved to be a large flaw in the ascension of Greece to the Eurozone. The analysis of the thesis is a liberal intergovernmen-tal analysis of the Greek ascension, and it shed light on a willing Greece that had to overcome economic hurdles to make the convergence criteria for joining the Eurozone. Greece (some-what) managed to do so, but even then, there were questions of the Greek economy’s ability to have membership. These questions were mostly overheard in the negotiations of the Greek membership, and Greece became a member rather easily. This would seem flawed given the Greek reporting of their economic situation was untruthful. Greece had adjusted their reported economic data to reach the convergence criteria, yet it was only disclosed after an audit in 2004.The thesis concludes the Greek ascension as being emblematic of the problems of the EMU. The dissonance in the framework of both centralized monetary policy and decentralized fiscal policy, and the responsibility of member-states to report to the surveillance program them-selves, provided Greece with an opportunity to become a member, through some creative ac-counting, when they were not capable to do so. Finally, I will discuss the problem area from another theoretical perspective; neoliberalism. The discussion will concern future avenues of research. The first proposition is the concept of cri-sis-led integration, and whether the reason the EMU had not been rectified before the crisis was a lack of incentive, as the flaws were not problematic before the crisis. The crisis would simply create a demand for functional spillover, as the flaws of the EMU became apparent via the cri-sis.The second avenue is more speculative and revolves around the idea of a social and cultivated spillover, which could be analyzed by seeing if the elites (here Financial Ministers and Central Banks) had changed loyalty to the European level, and therefore would favor integration of the EMU over the financial stability of the member-states. This would be enticed further by a culti-vated spillover by the EU. Both avenues would demand more research to fully create a problem area.

This doctoral dissertation investigates the origins and dynamics of the euro area economic inequalities through the reintroduction and revision of the unequal labour exchange and dependency theories. Inspired by the works of Prebisch-Singer, Lewis, and Emmanuel, the following exposition refutes the mainstream, market- fundamentalist narrative regarding the inequalities in two ways. The first one challenges the incentive-oriented and merit-oriented systems via the development of a model which studies inequality as a derivative of labour force exploitation. The second opposes the notion of international trade as a positive-sum game. The cornerstone of this research is a Marxian, desert-based principle which defines the inequalities as a result of the capital- labour antagonism originating from the class monopoly over the ownership of the means of production. The point of departure is that the euro area’s unequal exchange, arising from the innercountry labour force exploitation, plays a key role in governing cross- country inequality. On these grounds, the axis of this research evolves around the premise that the euro area countries, with distinct exploitation rates, realize vastly unequal gains from trade. This implies that the euro area’s structure generates new and amplifies existing inequalities, leading to the cross-country divergence in the social recognition of the used labour. The arguments being advanced in this study are examined through three sections. The first section presents the theoretical model of the unequal labour exchange used to explain the creation and the nature of the inequality. Backed by the static economic analysis between 2004 and 2013, the findings indicate that the euro area’s cross-country inequality is determined by the country-specific utilization of the existing market disequilibria, by the country-specific capital-labour ratios, and by the country- specific economic efficiencies. The effects of these inequality determinants are manifested through the cross-country deviations in the labour incomes, profit incomes, and labour force exploitation. Consequently, this forms a division between the exploitative (net-winning) countries and the exploited (net-losing) countries, thus confirming that the unequal labour exchange phenomenon is the driving cause of the euro area’s cross-country inequality. Building upon these foundations, the second section accounts for the changes occurring over time and captures the dynamic influence of the economic cycle on the euro area’s inequality. The empirical employment of the aforementioned inequality determinants and their effects allows for the trend-cycle decomposition and the clustering of the euro area countries in accordance with the similarities in exhibited trends. Within the reference period between 2003 and 2014, the euro area member countries failed to demonstrate a tendency to uniformly share economic cycles, thus proving their differentiability based on the distinct utilization of advantages arising from the cyclical influence. Certain euro area members became less resilient to shocks and downturns while asymmetrical benefit distribution, inflicted by the unequal labour exchange, resulted in cross-country divergence. The economic cycle exacerbated the conflicting interests between the euro area’s core and the periphery. This brought to the surface structural inconsistencies, as a result of the underlying economic laws that set in motion the exploitative cross-country dynamics. The third section furnishes empirical content based upon the proposition that the euro area’s inequalities emerge from country-specific economic structures. The panel data analysis between 2003 and 2016 confirms the asymmetrical consequences of the euro area’s development and demonstrates that the geographical distribution of the economic output is disproportionate to the labour consumed in its production. The latter was connected to the country-specific sectoral and technological compositions. The research disclosed that a country’s heterogeneity in structural compositions is a crucial component of the unequal recognition of the consumed labour that constitutes the cross-country inequality and determines the countries’ profit rates, wage rates, and exploitation rates. This investigation contributes to the field from both theoretical and empirical viewpoints. The arguments raised within this doctoral dissertation represent a novel extension of the unequal exchange theory, carried out by abandoning previously criticized aspects. This includes an exclusive focus on the capitalist mode of production, discarding the labour immobility assumption and the equivalence between the market prices and prices of production, and choosing the sample size for which the international and national law of value operate in a like manner. The advanced postulates remedy the disputed conceptual and methodological issues and contribute to the theory. This adds to the understanding of the complex nature of cross-country inequalities and enables a straightforward empirical assessment of the hypothesised effects. Such an innovative approach quantitatively confirms that the euro area is in a deadlock regarding the fact that the current state serves the affluent countries at the expense of their less-developed neighbours. This proves that the euro area integrates countries into relations of unequal exchange and that its structure intrinsically contradicts the aims of effective single market integration. The existence of the value-transferring mechanism of the unequal labour exchange exposes the tension between countries and challenges the sustainability of the European social model. Given the lack of adequate supranational institutional arrangements, which should serve as corrective institutes to prevent a growing disintegration bias, this investigation is a platform for re-questioning the euro area’s neoliberal policy discourse, which is deeply rooted in and incentivized by the inequalities that favour the interests of capital over labour as well as affluent countries over destitute ones.

The Economic Monetary Union (EMU) has been famously portrayed as a ‘metaphor for the European Union’, involving high stakes for the integration process as a whole. Since its origins, the creation of the EMU was an eminently political project, with a direct bearing on the prospects of the European Union (EU) as a polity, its social model, and its constitutional identity. Yet, the main political aspects of the project were mostly discarded in the process that led to the establishment of the EMU’s institutional structure and its substantive rules. The creation of the common currency was not accompanied by the establishment of supranational institutions with a strong political mandate to accommodate conflicting interests, while the exercise of political autonomy at national level has been increasingly seen as a potential danger for the stability of the whole edifice. The crisis and the ensuing reform of the European economic governance consolidated the technocratic character of the EMU architecture and hardened its grip on national political processes.

The European Union was established in order to create a more peaceful European continent through economic and social integration. To date, the EU has been successful; however, new challenges have begun to emerge. In particular, have the EU’s economic policies and German immigration procedures influenced the rise of populism in Germany, as represented by the populist group Alternative für Deutschland (AfD)? This question is answered by evaluating EU economic performance and mobility factors, as well as recent immigration trends in relation to the AfD’s formation and growing popularity. Furthermore, it appears that economic shortcomings and a declining workforce have created a demand for labor in Germany that has not been met by internal EU factors. As a result, over the past several years the German government has attempted to source its labor demand from outside the EU, namely through immigration from the Middle East and North Africa. However, many of the economic advantages often associated with immigration have yet to materialize. Over this same period, the AfD has experienced a significant increase of support within Germany. What is more, analysis indicates that the AfD’s recent success is potentially related to challenges associated with EU economic performance and immigration. Although the AfD’s recent success is troubling, the party likely does not pose near-term threat to the EU, unless the EU or global economy experiences another severe economic downturn. http://archive.org/details/theeconomicsofdi1094564856 Lieutenant Commander, United States Navy Approved for public release; distribution is unlimited.

Sweden became a member of the European Union (EU) in 1995. Since then, she has been integrated into the EU's internal market under the Single Market Programme (SMP). Before Sweden's accession to the EU, she was a member of the European Free Trade Association (EFTA) signed with the EU in 1972. Later, Sweden signed to become a member of the European Economic Area (EEA) in 1992, which ensures participation in the SMP for nations that are not members of the EU. Despite her long membership, the twin faces of a Euro outsider still exist in public opinion. It is divided on the issue of further European integration. Her position has faced highly skeptical EU public opinion, particularly in the Economic and Monetary Union (EMU). Moreover, her positioning as a euro outsider has been perceived by the euro member nations as that of a selective supranationalist despite the desire of the Swedish government to build a good European nation with a mixed policy portfolio. The Swedish economy has benefited since its full accession to the EU compared with the EEA. This paper discusses whether the Swedish EU membership has contributed to the economic integration with the EU positively or not. Furthermore, it analyzes which actors have been the biggest winners and losers from the full accession to the EU. Last but not least it also investigates the challenges and prospects for the Swedish economy in the near future.

The core objective of this paper is to determine the main political and economic conditions and challenges related to the possible evolution of the integration process in the euro area toward fiscal federalism and fiscal union as a way to increase the capacity of the area to cope with future economic and financial crises. The issue of a separate budget for this area is of particular interest in this article. The idea of such a budget has recently become the subject of lively public debate in the European Union and has been a factor in encouraging the European Commission to propose new solutions at the end of 2017 in the field of economic governance of the euro area, including the establishment of a European Monetary Fund. The analysis carried out in this article leads to the conclusion that under the current conditions, there is little chance of introducing such regulatory and institutional changes that would significantly increase the scale of financial transfers between the euro area member states.

International audience; The financial and economic crisis in the EU starting in 2008 triggered important economic difficulties for a number of member states. Amongst those, Ireland and Greece were confronted very early in this crisis with difficulties to raise money on financial markets. Financial loans were thus provided by Eurozone domestic leaders in order to insulate these countries from market's pressure and refinance their debt. Under the authority of the European Council, the European Commission, together with the European Central Bank (ECB) and the International Monetary Fund (IMF), negotiated a bailout plan with both countries. The implementation of these plans, however, took two different forms in Ireland and Greece. While Ireland has completed the structural reforms linked to the bailout plan, Greece is still confronted with serious delays in complying with the demands.The aim of this chapter is to investigate the factors that led to this differentiated outcome. Based on an implementation approach, we will analyze the reasons that led to higher resistances in the Greek administration than in the Irish one towards the EU-IMF rigor plans.

The article critically engages with the reconfiguration of the role and status of national social spaces within the EU constitutional fabric after the reform of European economic governance. Its main contention is that these reforms have converted national social spaces into adjustment variables whose main function is to contribute to the pursuit of EMU‐related objectives. This transformation alters the balance between the economic and the social dimension in the EU legal order, deforming one of the defining traits of its constitutional identity.