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

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Main author: Semieniuk, Gregor
Other authors: van Treeck, Till
Truger, Achim
Format: Book Chapters           
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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/

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