2012年-CEPS欧洲政策研究中心_How_to_deal_with_macroeconomic_imbalances_16页_1mb

Summary: How to Deal with Macroeconomic Imbalances?

Core Content

This report, authored by Daniel Gros and published by CEPS in 2012, examines the causes and consequences of macroeconomic imbalances within the euro area and explores the role of the European Central Bank (ECB) and other institutions in addressing these imbalances.

Main Points

1. Macroeconomic Imbalances in the Euro Area

• The euro area experienced significant macroeconomic imbalances over the past decade, primarily due to large capital flows from northern to southern countries.
• These flows were driven by a global credit boom and excessive risk appetite in financial markets.
• The main imbalance is between countries with current account surpluses (mostly in the north) and those with current account deficits (mostly in the south).
• The sudden stop of capital inflows in 2010 triggered financial distress in southern countries, leading to economic and social challenges.

2. Role of Competitiveness

• Competitiveness is often cited as a key factor in the imbalance, particularly in the southern countries.
• However, the report argues that competitiveness is not a direct policy variable and is endogenous, meaning it is shaped by market dynamics rather than government intervention.
• The official diagnosis attributes the loss of competitiveness to unjustified wage increases in the south, but this is seen as a symptom, not the root cause.
• The equilibrium level of competitiveness is difficult to define and measure, and using 1999 as a base year leads to overestimation of the divergence.

3. Impact of Capital Flows

• The sudden stop of private capital flows led to a sharp decline in domestic demand, resulting in lower GDP and higher unemployment in southern countries.
• The stock of imbalances—accumulated over years—poses a long-term challenge, as they must be continuously rolled over.
• The distribution of savings within the euro area is a key issue: while northern countries have excess savings, southern countries have accumulated large foreign debt.

4. Common Monetary Policy and Its Role

• The common monetary policy was too expansionary for too long, contributing to the buildup of imbalances.
• However, the main driver was the global credit boom, not the monetary policy itself.
• The ECB has limited ability to directly address these imbalances and can only help mitigate financial instability.

5. Role of ECB and ESRB

• The ECB is responsible for monetary stability and financial sector oversight, but it cannot directly correct macroeconomic imbalances.
• The European Systemic Risk Board (ESRB) focuses on systemic risk mitigation in the financial sector.
• The Excessive Imbalance Procedure (EIP) aims to monitor and address imbalances, but it is not a policy tool in itself and is more of an early warning system.

6. Challenges and Conflicts

• There are conflicts of interest between the ECB and national authorities.
• The ECB has an interest in rapid adjustment, while southern countries prefer support from the ECB.
• Country-specific measures may be necessary, but they conflict with the Commission's mandate to ensure internal market integrity.

Key Instruments and Indicators

The Macroeconomic Imbalances Procedure (MIP) includes a scoreboard with ten indicators, among which are:

• Current account balance (threshold: ±6% of GDP)
• Net international investment position (threshold: -35% of GDP)
• Export market shares (threshold: -6% change over five years)
• Unit labour costs (ULC) (thresholds: +9% for euro area, +12% for non-euro area)
• Real effective exchange rates (thresholds: ±5% for euro area, ±11% for non-euro area)
• Private sector debt (threshold: 160% of GDP)
• Private sector credit flow (threshold: 15% of GDP)
• House price index (threshold: 6% change relative to consumption deflator)
• General government debt (threshold: 60% of GDP)
• Unemployment rate (threshold: 10%)

These indicators are not policy targets or instruments, but rather tools for early warning and monitoring.

Conclusion

• The adjustment to macroeconomic imbalances must come from national policies, not from the ECB.
• Competitiveness is not the only factor affecting imbalances and is not easily manipulated by policy.
• The role of the ECB is limited to financial stability, while the ESRB focuses on systemic risk.
• The EIP is a useful tool for identifying risks, but its effectiveness in guiding policy is limited.
• A balanced approach is needed, combining national adjustment efforts with ECB support to avoid further economic and social disruption.

References

• The report draws on data from the European Commission Services (Ameco).
• It references historical data on unit labour costs and exchange rates.
• The Walters critique is mentioned as an alternative view on monetary policy transmission.

Final Thoughts

• The adjustment process is expected to be long and painful, given the stock nature of imbalances.
• Export-led growth is a necessary but difficult path for southern countries to take.
• The institutional conflicts between the ECB, ESRB, and the European Commission highlight the complexity of addressing macroeconomic imbalances in the euro area.