The “Monetarist” Turn in Belgium and the Netherlands

  • Erik Jones


Belgium and the Netherlands (the Low Countries) were among the first West European countries to use their economic relationship with Germany in order to support domestic adjustment. At the start of the 1980s, the governments of both countries stabilized their exchange rates with the Deutschemark (DM), they began to cut spending and raise taxes, and they negotiated and enforced wage moderation on the part of the major trade union confederations. In the short term, the net effect of these policies was to slow down domestic price inflation, to redistribute income from labor to industry, and to raise the profitability of capital. In the medium term, both countries saw a rise in unemployment simultaneous to a rise in exports, investment, and corporate profitability. They also witnessed a shift in employment from manufacturing to services and a decline in trade union membership.


Exchange Rate Trade Union European Monetary Union European Monetary System Fiscal Consolidation 
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© Erik Jones 2005

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  • Erik Jones

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