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Germany and the European Disease(1)

Published online by Cambridge University Press:  17 August 2016

John Davis  and
Patrick Minford
John Davis
Affiliation:
University of Liverpool
Patrick Minford
Affiliation:
University of Liverpool
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Extract

I. INTRODUCTION

Unemployment in Europe has risen during the 70s and early 80s to double digit rates, rates which are not considered likely to fall much in the remaining years of the 80s. This is so in enough countries to encourage some to speak of a ‘European disease’. Those of us who live in Britain have long been familiar with the ‘British disease’, as have the Dutch with their ‘Dutch disease’ (supposedly related to North Sea energy resources). This paper suggests that these earlier national ailments are precursors of the general European one to which attention has more recently been drawn — notably by Professor Giersch who has spoken of a ‘market sclerosis’ in Europe, especially in the labour market (Giersch, 1985). (Also see OECD (1985, p. 38)).

However, in spite of this provocative general opening we wish to focus in this paper on West Germany, and thus to highlight a specific case of what may well be a general phenomenon. Our motivation is fourfold: to widen the analysis of the possible disease to a country in which there is wide interest; to stimulate other European researchers to work along the lines of analysis portrayed here; to follow up the echoes sounded in the comments of authoritative national students (e.g. Giersch, op. cit., and de Grauwe, Fratianni and Nabli, 1985), and finally, to utilize a full macroeconomic model of the Federal Replublic of Germany in this direction of research.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 52 , Issue 3-4: Symposium on Unemployment in Europe , December 1986 , pp. 373 - 398
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1986 

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Footnotes

(1)

Paper presented at the Conference « Unemployment in Europe», The European Production Study Group, Maastricht, April 1986. Useful comments were received from participants in this Conference and in a seminar at International Finance Division, Federal Reserve Board; thanks are due especially to Victoria Chick. Neil Ericsson , Michael Gavin, David Germany and Karen Johnson. We are grateful to S. Blackman and J. Riley for computational assistance with the German model, and for production of the graphs. We also thank the ESRC for their financial support of this research. We alone of course remain responsible.

References

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FURTHER READING

Addison, J., et al (1979), Job Creation or Destruction, Six Essays on the Effect of Government Intervention in the Labour Market, The Institute of Economic Affairs.Google Scholar
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Minford, P. (1984), Response to Nickell, The Economic Journal, 94, pp. 954–9.Google Scholar
Minford, P. (1985a), The Effects of American Policies — a New Classical Interpretation, in International Economic Policy Coordination (eds. Buiter, W.H. and Marston, R.C.), Cambridge University Press, pp. 84–138.Google Scholar
Minford, P. (1985b), Reply to Henry, Payne and Trinder, Oxford Economic Papers, 37, pp. 339–43.Google Scholar
Nickel, S.J. (1984), A Review of Unemployment Cause and Cure by Patrick Minford (et al), The Economic Journal, 94, pp. 946–53.Google Scholar