Narrative Economics: Europe as a "Transferunion" or "Risikogemeinschaft"? An empirical analysis

Abstract

Economic developments are often influenced by narratives, i.e. popular or generally understandable and easily reproducible narratives, images and interpretations. In debates about European integration, the sovereign debt crisis and solutions to the Corona crisis – the latter has rekindled concerns about the public finances of thrifty states – the narrative of Europe as a “transfer union” plays a major role. This assumes unilateral payments from economically strong countries to economically weaker ones. An analysis of all the plenary minutes of the German Bundestag shows that this narrative has spread since the introduction of the euro and reached its peak with the European sovereign debt crisis in 2010/11. However, it is a distorted image that sees Germany as the loser of European integration. More appropriate images of Europe as a “stability union” or “risk community” can be used to justify the advantages of currently discussed – or already implemented – measures to stabilise the EU for all member states.