European economic policies

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Since the mid-1990s, Euro area countries have faced slow growth and high unemployment, particularly since the growth slowdown in 2001. The sole achievement of European monetary integration has been a significant reduction in inflation, which, however, has led to deflation risks in some member states, especially Germany. Economic policy actors in Europe have largely responded to these challenges by advocating for further structural reforms in the labor market and social benefit systems, continuing a strategy pursued for over 25 years to boost potential growth and reduce structural unemployment. Monetary and fiscal policies have been deprioritized to maintain a stable environment characterized by stable prices and low inflation expectations. In Germany, the situation appears even more dire, with mainstream advisers often denying the short-term effects of macroeconomic policies. This volume presents critical perspectives on orthodox analyses and mainstream economic policies, exploring alternative approaches to enhance growth and reduce unemployment. It includes assessments of the causes of slow growth, issues related to EU enlargement, and discussions of alternative economic policy concepts. The papers address various topics, including demand neglect in the Euro area, the European fiscal framework, and the implications of the Stability and Growth Pact.