The analysis in this Commentary provides strong evidence showing that the burden of the adjustments to the imbalances in the eurozone between the surplus and the deficit countries is borne almost exclusively by the deficit countries in the periphery. And although the European Commission has now been invested with an important responsibility of monitoring and correcting macroeconomic imbalances in the framework of the Macroeconomic Imbalance Procedure (MIP), the author finds that up to now it imposes a lot of pressure on the deficit countries but fails to impose a similar pressure on the surplus countries, with the effect that the eurozone is being kept in a deflationary straightjacket.

Paul De Grauwe is Professor at the London School of Economics and Associate Senior Fellow at CEPS.