Rational expectations are often used as a strong argument against policy activism, as they may undermine or neutralize the policymaker’s actions. Although this sometimes happens, rational expectations do not always imply policy invariance or ineffectiveness. In fact, in certain circumstances...

We argue that wages have increased so far ahead of labour productivity in East Germany as to produce a problem that will continue to hound German policy-makers for the next two decades. Despite rapid rates of capital accumulation (around 9%) and growth (around 5%) in East Germany over the coming...

Discusses the idea of a two‐speed Europe in the light of the recent open letter from the governing parties in Germany. This letter raised the ideal of a two‐speed Europe from a de facto configuration of the European economies to an explicit strategy for European integration. Puts forward the...