Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69547
Authors: 
Sinn, Hans-Werner
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper: Fiscal Policy, Macroeconomics and Growth 4086
Abstract: 
While the financial protection measures enacted by the ECB and the community of Eurozone members have calmed financial markets, they have left the competitiveness problem of the Eurozone's southern countries and France unresolved. The paper compares price inflation before the crisis with the necessary and actual price cuts that have taken place since the outbreak of the crisis, predicting a decade of stagnation for the south and inflation for the north. Keynesian demand policy is counterproductive in the south and unnecessary in the north. The necessary realignment of relative goods prices and current account imbalances can be achieved if market forces are allowed to redirect capital flows to the north instead of being artificially steered to uses they are keen to avoid.
Subjects: 
competitiveness
inflation
realignment
Keynesian policy
JEL: 
E31
E61
E62
F31
F32
F34
H62
H63
Document Type: 
Working Paper

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