Heiner Flassbeck and Costas Lapavitsas published an article on the website of the Institute for New Economic Thinking. Most macro-economists now accept that peristent German wage moderation is a vital cause of the fundamantal imbalances within the European Monetary Union. Flassbeck and Lapavitsas showed on numerous occasions that these imbalances are responsible for the Eurozone crisis: they amount to German dominance in exports, export of German unemployment, weak investment, low productivity gains within the Union and, finally, deflation. Recently, this analysis was questioned by Servaas Storm. Storm admits that there has been nominal wage moderation in Germany, but considers it to be relatively unimportant. In his view, what matters in the Eurozone is superior German productivity and correspondingly declining relative unit labour costs. Therefore, to Storm, accusing Germany of deliberatly undercutting its partners via domestic wage moderation is to miss the point. Flassbeck and Lapavitsas argue that Storm simply misunderstands the functioning of monetary unions. The article can be read here.