Munich Personal RePEc Archive

The future of the euro

Duwicquet, Vincent and Mazier, Jacques and Petit, Pascal and Saadaoui, Jamel (2015): The future of the euro. Published in: Routledge Advances in Heterodox Economics (February 2015)

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The euro crisis illustrates the deficiencies of adjustment mechanisms in a monetary union characterized by a large heterogeneity. Exchange rate adjustments being impossible, few alternative mechanisms are available. Nevertheless, fiscal policy could play an active role.

The chapter is organized as follow. In the first part, we give a new evaluation of these exchange rate misalignments inside the eurozone, using a FEER approach, and we discuss the structural character of these misalignments. In the second part, we analyse the deadlock of the actual European institutional framework and propose two alternative exit strategies, a first step towards a fiscal federalism or, on the opposite, a new monetary regime based on a multi-euro system.

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