A blog on the political, economic and social causes and implications of the crisis in the Southern periphery of the Eurozone.

I'm a political scientist working on political parties and elections, social and economic policy and political corruption, with a particular focus on Italy and Spain. For more details on my work, see CV here, and LSE homepage here. For media or consultancy enquiries, please email J.R.Hopkin@lse.ac.uk.

Saturday, December 24, 2011

Peter Hall tells it how it is

Excellent analysis of the Euro crisis by Peter Hall. In particular, he summarizes the macroeconomic imbalances, and their inevitability, very succinctly here:

In the past, (Southern Europe followed) growth strategies led by domestic demand and then devaluing their currencies to offset the inflationary effects of such strategies on their external competitiveness. In EMU, they were unable to do that. Instead, not unreasonably, they took advantage of the cheap credit flowing from northern Europe to promote economic growth. But, unable to offset the inflationary effects through devaluation, they lost competitive advantage to the north. The result can be seen in the gross imbalance of payments between the two parts of the Eurozone.

Pity so few influential policy-makers seem to have figured this one out.