ECB Economists Find Benefits in ‘Fiscal Devaluation’
From blogs.wsj.com
One of the thorniest issues facing the euro zone is how members of the 18-country currency bloc can improve competitiveness and exports without having a national currency that can be devalued. In a paper published by the European Central Bank, a trio of economists have come up with a way: “fiscal devaluation.” What it basically means is using fiscal measures–in this case higher consumption taxes and lower social contributions paid by companies–to boost competitiveness, giving exporters a leg up and raising investment. The paper’s authors–from the ECB, Bank of Italy and Bank of Portugal–estimate the effects on ...
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