Paulette Kurzer School of Government and Public Policy University of Arizona

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Oct 28, 2013 (3 years and 7 months ago)

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Paulette Kurzer

School of Government and Public
Policy

University of Arizona



Institutional Complementarities


o
Higher the Complementarities,

o
The easier it has been to adjust to single
currency,

o
With corresponding greater ability
to cope
with the global crisis



Social
concertation
, i.e. the
Polder Model



Provides flexibility, ability to reduce/control
wage
-
price development, restructure social
security



Promotes non
-
inflationary growth

1.
Complementarities….’accidental’


2.
Social
concertation
…. ‘coercive’


3.
Impact of the crisis…. ‘lucky’


NL is able to address the four key
conditions of single currency: price stability,
fiscal austerity, financial discipline, macro
economic equilibrium.



Due to the fact that it joined EMS/ERM in
1979 and pegged to DM in 1982.



Institutional complementarities pre existed
EMU, and corresponded to Dutch
preferences and priorities



Revived in 1982 after its collapse in1970s


Wage restraints in return for job creation


In the1990s social exchanges and
cooperation (unemployment had dropped)


After 2000, again, intense conflict and
difficulties (based on social security reforms)


Forced pay freezes and pay stops 2003 2004
2005

OECD Economic Surveys, Netherlands 2008, p. 22



Wage freezes of 2003
-
2005 in combination
with labor market flexibility



Tight labor market, shortage of labor



Recession loosened tight labor market


hence good labor market performance as
there was a shortage earlier.



German
-
China Factor


Twenty
-
five percent of all Dutch exports are
destined for the German market


exports are domestic produced goods and
manufactured goods produced by companies
of foreign origin ‘in transit’



Transit trade rose on average 11% between
2000
-
2008 domestically produced exports
grew 2 percent during that period.


Institutional complementarities predate
founding of EMU,


State played a large role in imposing,
insisting on social
concertation


Role of the State also predates EMU



Lucked out as the labor market was tight
before 2008


And important supplier to the Germany
economy.



Institutions provide advantages at certain
points


Advantage may be a function of previous
legacy and crises.


NL has coped with external vulnerability


US has been protected from similar kinds of
exposures.