Report September 2003

The slowdown in economic growth and rising unemployment in the euro area have revealed serious fault lines in the stability and growth pact governing the zone’s macroeconomic policies. In an editorial, Philip Arestis and Malcolm Sawyer state that the pact threatens to become an “instability and no growth pact,” with the thrust of fiscal and monetary policies pushing the Eurozone economies in a deflationary direction.

Contents: Editorial – Europe’s Imposed Stability, Now It Has to Create Growth * New Working Papers topics include: US Workers’ Investment Decisions for Participant-Directed Defined Contribution Pension Assets; Mexicans Now, Italians Then: Intermarriage Patterns; Finance and Development: Institutional and Policy Alternatives to Financial Liberalization Theory; The Conditions for a Sustainable US Recovery: The Role of Investment; Is Europe Doomed to Stagnation? An Analysis of the Current Crisis and Recommendations for Reforming Macroeconomic Policymaking in Euroland; How Long Can the US Consumers Carry the Economy on Their Shoulders?; Reinventing Fiscal Policy; The Case for Fiscal Policy * New Policy Notes: Reforming the Euro’s Institutional Framework * Caring for a Large Geriatric Generation: The Coming Crisis in US Health Care * Levy Institute News: Upcoming Event