Diverging fiscal policy paths, housing booms and diverging unit labour costs were driving forces of rising intra-European current account imbalances, which were underpinned by low interest rates. Since the outbreak of the crisis, the adjustment of intra-EMU current account imbalances has been...

This paper investigates whether the recent EU governance reform is a step in the right direction and discusses its ability to restore European financial stability. The authors argue that the reform appears incapable of dealing with the factors responsible for the sovereign debt crisis, and they...

Ignoring for a moment the debate on whether balanced budget rules are a sensible idea from a macroeconomic point of view, there remains a major problem with tying one’s fi scal policy to econometric estimates of potential variables: their notorious unreliability. With every one of its biannual...