Authors: Engelbert Stockhammer
Addresses: Faculty of Arts and Social Sciences, Kingston University, Penrhyn Road, Kingston upon Thames, Surrey KT1 2EE, UK
Abstract: The paper argues that the Greek debt crisis, as well as those of other Southern European countries and Ireland, has to be seen in macroeconomic context. The sum of the public sector balance, the (domestic) private sector balance and the current account deficit (or equivalently: the capital inflows) has to add up to zero. By implication in a country that has a current account deficit either the private sector or the public sector has to run a deficit. Therefore, the peripheral countries can only solve their public debt problems if there is a change in German current account surpluses. The paper explores the implications of this for wage policy in the Euro zone.
Keywords: Economic and Monetary Union; EMU; euro area; eurozone; European Union; EU; financial crises; single currency; currencies; sovereign debt; wage policies; wage coordination; Southern Europe; Germany; Greece; Ireland; macroeconomics; public sector; financial balances; domestic sector; private sector; current accounts; account deficits; capital inflows; peripheral countries; public debt; account surpluses; wages; Portugal; Italy; Spain; peripheral Europe; public policy; economic policies; alternative paradigms.
International Journal of Public Policy, 2011 Vol.7 No.1/2/3, pp.83 - 96
Published online: 14 Jan 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article