The financial crisis of 2007-09 soon morphed into a crisis of public debt. This paper argues that the way the Eurozone crisis was discursively constructed led to a large scale entrenchment of European welfare states. First of all, how the crisis was constructed did not reflect its actual causes...

The global spread of COVID-19 and, above all, the social distancing measures adopted to contain the health crisis have resulted in a significant standstill in economic activity in most economies. The economic impact on different countries’ or regions’ economies may vary significantly...

The core objective of this paper is to determine the main political and economic conditions and challenges related to the possible evolution of the integration process in the euro area toward fiscal federalism and fiscal union as a way to increase the capacity of the area to cope with future...

Economic theory has recently begun to consider the economic impact of narratives. Narrative economics can also be extended to the analysis of the economic-political effect of narratives in the context of the European core-periphery divide, which intensified after the European sovereign-debt...

Austerity measures are frequently enacted when the sustainability of public finances is in doubt. Such doubts are reflected in high sovereign yield spreads and put further strain on government finances. Is austerity successful in restoring market confidence, bringing about a reduction in yield...

The welfare state was created after 1950 with counterproductive mechanisms and this caused high inflation and high unemployment and stagnating growth by 1970, called stagflation. Since 1970 governments redressed the welfare state but did not succeed in finding workable mechanisms. They rather...

We analyze the role of fiscal policy and intra-European trade in business cycle synchronization in the EU for the period 1995-2008. There is a broad consensus that the relationship between fiscal policy and business cycle comovements and between trade integration and cyclical synchronization are...

We present the estimated large-scale three-region DSGE model GEAR picturing Germany, the Euro Area and the Rest of the world. Compared to existing models of this type, GEAR incorporates a comprehensive fiscal block, involuntary unemployment and a complex international structure. We use the model...

In this paper, we assess the impact of major German structural reforms from 1999 to 2008 on key macroeconomic variables. By many, these reforms, especially the Hartz reforms on the labor market, are considered to be the root of observed imbalances in the Euro Area. Our simulations within a...

This paper investigates the role of fiscal policies over the aggregate EMU business cycle. Previous studies, based on the assumption of non-separability between public and private consumption, obtain a large public consumption multiplier, a small fraction of non-Ricardian households and,...