Perspectives for CESEE Countries
Edited by Ewald Nowotny, Doris Ritzberger-Grünwald and Helene Schuberth
Chapter 2: The rebalancing challenge in Europe
The purpose of this chapter is – starting from first principles – to provide a large-scale bird’s-eye overview of what is to come in this book. Readers will find chapters on monetary policy, balance sheet adjustment and growth, inequality and its role in generating internal macroeconomic imbalances, external macroeconomic rebalancing, and banking sector regulation. They all presuppose that Europe, and within it the regions of Central, Eastern and South-Eastern Europe (CESEE) that we focus on here, have problems that for their solution require more than just higher aggregate demand in the short term. Proper solutions require large-scale sectoral rebalancing. And that sectoral rebalancing needs to be rapid. Why? Because these economies will not grow smoothly without deep structural reforms; these reforms need to be not just at the bottom but at the top, and reforms of institutions, governance structures, and regulatory practices and mandates need to be carried out as well. Note that the need, while urgent in Central Europe, Eastern Europe and South-Eastern Europe, is not necessarily more urgent here than in the other regions of Europe.
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