Post-Keynesian alternative policies to curb macroeconomic imbalances in the Euro area

• Main Authors: Hein Eckhard, Detzer Daniel
• Format: Article
• Language: English
• Published: Economists' Association of Vojvodina 2015-01-01
• Series: Panoeconomicus
• Subjects: differential inflation rates; current account imbalances; competitiveness; Euro area economic policies
• Online Access: http://www.doiserbia.nb.rs/img/doi/1452-595X/2015/1452-595X1502217H.pdf
• ISSN: 1452-595X; 2217-2386

In this paper we outline alternative post-Keynesian policy recommendations addressing the problems of differential inflation, divergence in competitiveness and associated current account imbalances within the Euro area. We provide a basic framework in order to systematically address the related issues making use of Anthony P. Thirlwall’s (1979, 2002) model of a “balance-of-payments-constrained growth rate” (BPCGR). Based on this framework, we outline the required stance for alternative economic policies and then we discuss the implications for alternative monetary, wage/incomes and fiscal policies in the Euro area as a whole, as well as the consequences for structural and regional policies in the Euro area periphery, in particular.