Competitiveness and its Leverage in a Currency Union or How Germany Gains from the Euro

13 Pages Posted: 6 Jul 2016

Date Written: July 2, 2016

Abstract

A distinction is drawn between two notions of competitiveness. 'Essential' competitiveness focuses on the inherent developmental potential of an economy while 'apparent' competitiveness is largely determined by the exchange rate's influence on the current account. A currency union leverages (positively or negatively) a country's 'essential' competitiveness that diverges from the weighted average 'essential' competitiveness of the union as a whole, when compared with its competitiveness outside the currency union. Germany's recent economic success is largely due to the leverage of its relatively high 'essential' competitiveness by the Eurozone. The uncertainty regarding the economic prospects of both the weaker members and the Eurozone further enhances Germany's gain from the euro.

Keywords: Competitiveness, 'essential' competitiveness, 'apparent' competitiveness, leverage, currency union, Eurozone, euro, Germany

JEL Classification: E12, F02, F15, O52, P16

Suggested Citation

Skouras, Thanos (Athanasios), Competitiveness and its Leverage in a Currency Union or How Germany Gains from the Euro (July 2, 2016). Available at SSRN: https://ssrn.com/abstract=2804027 or http://dx.doi.org/10.2139/ssrn.2804027

Thanos (Athanasios) Skouras (Contact Author)

Athens University of Economics and Business ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
66
Abstract Views
569
rank
455,962
PlumX Metrics