Competitive Disinflation

This book addresses one of the main areas of debate concerning economic developments in Europe, namely the extent to which the budgetary policy of national governments is competitive rather than co-operative. The discussion focuses on three particular cases: French macroeconomic policy since 1987; the reunification of Germany; and constraints imposed on national governments' budgeting powers by membership of EMU. This is a book about the radical alteration of the environment in which economic policy is formulated. Historically high interest rates, the freeing of capital markets, and the towards economic and monetary union have all severely limited options for government action. This report is an analysis of options for action and a consideration of factors limiting the effectiveness of that action. The title of the book comes from the discussion of the French (and later the British, Italian and Spanish) decision to pursue a policy of competitiveness by tight fiscal policies and using higher llevels of unemployment to force wage costs down.
This is the first in a series of annual reports on European economic developments by an international panel of distinguished economists writing accessibly. OFCE is an independent research forum based in Paris, and all the economists involved have participated in the report. The book reads as a report rather than a textbook, so suitable for all those, including students, who have an interest in the subject and the insights contained in this clear exposition of highly topical debates. This book is intended for many economics undergraduates; academics in macroeconomics and the economics of Europe. Journalists and commentators.