Thursday, April 11, 2013

Rehn Calls for Germany to Boost Demand

Times quotes Olli Rehn, European Commissioner for Monetary and Economic Affairs:
But Mr. Rehn also echoed calls made earlier this week by the U.S. Treasury secretary, Jacob J. Lew, for Germany, the biggest economy in the euro zone and one of its most robust, to do more to spur spending and help revive growth.
“I still believe, and the commission still believes, that there is much more Germany can do in order to boost its domestic demand,” Mr. Rehn said.
Germany, he said, should do more to open its service sector to competition, to increase the number of women in the labor market and to lift wages to match greater productivity. Such steps could lead to greater exports from other euro zone economies.
Now, Olli Rehn is hardly a model of anti-austerity politics, nor is he in any sense a Keynesian. In the same breath he calls on France to cut wages and government spending. But even at the heart of austerianism, there is a sense that demand must come from somewhere, and Rehn, like Lew, is calling on Germany to step up. I cite this article to extend the answer I gave yesterday to a comment by Brent on an earlier post.

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