Reprint of: Quantifying the Germany shock: Structural labor-market reforms and spillovers in a currency union

• 成果类型: Article
• 署名作者: Fadinger, Harald; Herkenhoff, Philipp; Schymik, Jan
• 署名单位: University of Mannheim; Centre for Economic Policy Research - UK; Johannes Gutenberg University of Mainz
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2024.103931
• 发表日期: 2024
• 关键词: euro; monetary union; nominal rigidities; labor markets; structural reforms; import competition; spillovers; Quantitative trade model

摘要

We examine the effects of unilateral structural reforms within a currency union. Focusing on the surge of German competitiveness following the introduction of the Euro, we first provide reducedform causal evidence supporting the notion that German structural labor -market reforms in the early 2000s led to a crowding -out of manufacturing employment in other Eurozone economies. To assess the impact of this German competitiveness shock, we build a quantitative multi -sector trade model that features downward nominal wage rigidities, endogenous labor supply, unemployment -insurance benefits and international savings. The fixed nominal exchange rate can create binding nominal rigidities in response to a foreign real supply shock - like the one prompted by the German reforms - resulting in significant contraction of manufacturing sectors and increased involuntary unemployment across other Eurozone countries. We consider a number of counterfactual scenarios, such as the impact of German labor -market reforms in the absence of a fixed exchange-rate regime, the role of coordinated reforms within the Eurozone and a higher average inflation rate.