Overshooting the Maastricht Criteria: External Imbalances and Income Convergence in the European Union

Menbere Workie Tiruneh, Ph.D.
Institute of Economic Research, SAS, Slovakia; VSM/CityU, Slovakia; and Webster Private University, Austria

Series: Economic Issues, Problems and Perspectives
BISAC: POL058000




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While mainstream economists were convinced they had solved the business cycle phenomena of macroeconomic policy making, the Great Recession has once again underscored the verdict of history, where every boom has almost always been accompanied by a bust and recession. The book discusses theoretical controversies and state-of-the art empirical studies on the link between external imbalances and real income convergence in the European Union. The book shows successful real income convergence across the European Union on the country level and pinpoints persistent regional disparities within countries in most of the member states of the European Union. The book addresses broader aspects of external imbalances and their key determinants and provides fresh empirical and exploratory evidence on paradigm shifts in the past several decades.

This book also empirically estimates both the causality between public debt and economic growth as well as the optimum level of public debt for EU member states. Additionally, the book discusses the link between illicit capital flows and external imbalances in the European Union. Overall, the book critically investigates both theoretical frameworks of global imbalances and systematically evaluates milestones and paradigm shifts in global imbalances; it also offers new empirical results based on the panel data of both “old” and “new” EU member states in the past several decades. Finally, the book addresses a number of the policy challenges, disputes and controversies in the European Union in terms of solving the ongoing external imbalances and harmonizing policies to prevent future challenges.

General Introduction

Chapter 1. Global Imbalances: Theoretical Framework

Chapter 2. Paradigm Shifts in Global Imbalances

Chapter 3. Capital Flight and External Imbalances

Chapter 4. The Theory and Empirics of Economic Growth and Convergence

Chapter 5. Growth and Income Convergence in Times of External Imbalances: A Focus on the European Union

Chapter 6. External Imbalances and Policy Dilemmas

Concluding Remarks



The proposed monograph gives state of the art analysis of the economic growth in the EU-countries and by investigating a link between long-run economic growth and short-term economic imbalances fills an important gap in our understanding of economic behaviour of both developed and developing countries. Therefore, I r e c o m m e n d his monograph for publication.” - Dr. Daniel Dujava

"A lot of empirical evidence presented in the book is a valuable material for both theoretical economists and academia as well as for policymakers that are open to empirical evidence and evidence-based policy making. The author analyses policy dilemmas that policy makers have to face in these days. Overall, Dr. Menbere Workie Tiruneh has conducted a valuable research on external imbalances and income convergence in the European Union and I recommend this book for a publication." - Dr. Martin Labaj

Keywords: Global imbalances, current account, income convergence, economic growth, Maastricht Criteria, Great recession, policy dilemmas

The book critically summarizes theoretical frameworks of global imbalances and economic growth and offers empirical evidence on the link between global imbalances and economic growth. The target audience could range from university professors and students in economics and finance as well as policy makers globally and in the European Union.

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