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

Main author:	Semieniuk, Gregor
Other authors:	van Treeck, Till Truger, Achim
Format:	Book Chapters
Online access:	Click here to view record

id	eprints-24059
recordtype	eprints
institution	SOAS, University of London
collection	SOAS Research Online
language	English
language_search	English
description	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.
author_additional	Jespersen, Jesper
author_additionalStr	Jespersen, Jesper
format	Book Chapters
author	Semieniuk, Gregor
author_facet	Semieniuk, Gregor van Treeck, Till Truger, Achim
authorStr	Semieniuk, Gregor
author_letter	Semieniuk, Gregor
author2	van Treeck, Till Truger, Achim
author2Str	van Treeck, Till Truger, Achim
title	Nothing learned from the crisis? Some remarks on the stability programmes 2011–2014 of the Euro area governments
publisher	Edward Elgar Publishing
publishDate	2012
url	https://eprints.soas.ac.uk/24059/

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

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