Bullettin n. 1/2011 | ||
June 2011 | ||
Wolf Holger |
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Internal devaluation in a monetary union | ||
in International Economics and Economic Policy , Volume 8, Number 1 / April 2011 , 2011 , 3-6 | ||
Reversing significant cumulative losses in competitiveness has emerged as a core challenge in some Eurozone countries. This brief note takes a closer look at one episode of successful internal devaluation, the experience of the new states following German reunification. The case suggests that substantial cumulative competitiveness gains are possible but require significant time. The case further points to relative productivity gains—and hence to structural reforms—as an important aspect of the adjustment process. | ||