Europe’s Hunger Games: Income Distribution, Cost Competitiveness and Crisis

@article{Storm2015EuropesHG,
  title={Europe’s Hunger Games: Income Distribution, Cost Competitiveness and Crisis},
  author={Servaas Storm and C. Naastepad},
  journal={Cambridge Journal of Economics},
  year={2015},
  volume={39},
  pages={959-986}
}
The dominant view, both on the mainstream right and on the left, holds that the Eurozone crisis is a crisis of labour-cost competitiveness—with trade imbalances (and hence foreign indebtedness) being driven by divergences in relative unit labour costs (RULCs) between surplus and deficit countries. To re-balance Eurozone growth, the mainstream solution is a deflationary policy of ‘internal devaluation’ (i.e. cutting the wage share by as much as 30%) in the deficit countries. The ‘progressive… Expand
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