Saturday, March 15, 2014
Sales Conference (Omni Shoreham)
The rediscovery of a common European ‘Stability Culture’, that is an economic policy perspective whose primary concern is price stability (Howarth and Rommerskirchen 2013), was the ideational element of the German government’s official remedy to the eurozone sovereign debt crisis which erupted in 2009. This forms part of a deliberate communication strategy that presented German Stability Culture as the source for the country’s economic success story and a lack of said culture as the main culprit for the sovereign debt crisis. This narrative pitted the allegedly prudent North against the profligate South. Our study challenges the crisis narrative. Using Eurobarometer surveys we construct a measurement for Stability Culture which is based on the priority assigned to the flight against inflation. Our empirical analysis of the political and economic determinants of inflation aversion covers the 2002 to 2010 timespan and includes all 27 EU member states. Our results strongly suggest that the distinction between northern states with an allegedly strong and southern states with an allegedly weak Stability Culture is a myth. Controlling for actual inflation, we find that the countries with an allegedly high Stability Culture are less concerned with price stability then the rest of the EU. We argue that irrespective of its factual accuracy, the promotion of Stability Culture is bound to stay. For German politicians identifying the solutions to the eurozone’s woes in fiscal austerity and price stability is a useful shield against calls for future integration, notably concerning a banking and/or a transfer union.
