Changes in the Eurozone governance after the crisis and the issue of growth

Schilirò, Daniele (2013): Changes in the Eurozone governance after the crisis and the issue of growth.

Abstract

The Eurozone countries are still trying to find a way out to the crisis that has affected the European Monetary Union (EMU) since 2010. Sovereign debt crisis, difficulties in the banking system and large current account imbalances have characterized the crisis of the euro, while several countries of Eurozone have entered in a phase of slow and even negative growth. All this have put at risk the sustainability of EMU, leading to a climate of pessimism and distrust about the future of the single currency. The crisis of the Eurozone has shown that a sustainable currency union requires more governance because of the higher degree of economic, financial and fiscal spillovers between euro member countries. However, the crisis has led to significant changes in the institutional framework of EMU and in the economic policies of Eurozone, highlighting above all the role of ECB. The present contribution analyzes these changes in the eurozone governance and discusses whether they are the correct solutions to the crisis, it also focuses on the unresolved issue of growth in the peripheral Eurozone countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Eurozone governance, current account imbalances, economic growth, ECB’s monetary policy
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

References

Bagehot W. 1873. Lombard Street: A Description of the Money Market. London, King; reprinted New York, Wiley, 1999.

Bongardt, A., Torres, F. 2012. The Lisbon Strategy, in Jones, E., Menon, A., Weatherill, S. (eds.), The Handbook on the European Union, Oxford, Oxford University Press: 469-483.

Cúrdia V. Woodford M. 2011. The Central Bank balance sheet as an instrument of monetary policy, Journal of Monetary Economics, 1: 54-79.

Darvas, Z., Pisany-Ferry, J., Sapir, A. 2011. A comprehensive approach to the euro-area debt crisis. Bruegel Policy Brief, Bruegel, n.2, February.

Darvas, Z., Pisany-Ferry, J., Wolff, G. 2013. Europe’s growth problem (and what to do about it). Bruegel Policy Brief, Bruegel, n.3, April.

De Grauwe, P. 2013. Design failures in the Eurozone: can they be fixed?, LEQS Paper No.57, February.

De Grauwe, P., Ji, Y. 2013. Panic-driven austerity in the Eurozone and its implications, VoxEU.org, February.

Estrada, A., Galì, J., Lopez-Salido, D. 2013. Patterns of convergence and divergence in the euro area, Barcelona GSE Working Paper, n.722, October.

Eurostat 2013. Real GDP Growth Rates, European Commission, Brussels. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

Feldstein, M.S. 2011. The euro and European economic conditions, NBER Working Paper No. 17617, November.

Glencross, A. 2013. The EU response to the eurozone crisis: democratic contestation and new fault lines in European integration, Europa-Kolleg Hamburg Discussion Paper, n.3/13, July.

Gros, D. 2011. Pact for the euro: Tough talk, soft conditions?, VoxEU.org, 14 March.

Hughes Hallett, A., Martinez Oliva, J.C. 2013. The importance of trade and capital imbalances in European debt crisis, Peterson Institute for International Economics, Working paper, n.1, January.

Kirkegaard, J.F. 2011. The Euro area crisis: origin, current status, and European and US responses, Peterson Institute for International Economics, Congressional Testimony, October 27, 2011.

Pisani-Ferry, J., Wolff, G.B. 2012. Propping up Europe?, Bruegel Policy Contribution, issue 2012/07, April.

Pisani-Ferry, J., Sapir, A., Wolff, G.B. 2012. The messy rebuilding of Europe, Bruegel Policy Brief, issue 2012/01, March.

Pollard, P. S. 1993. Central Bank independence and economic performance, Federal Reserve Bank of St. Louis Review, July/August, 75(4): 21-36.

Schilirò, D. 2012. A new governance for EMU and the economic policy framework, MPRA Paper 47454, University Library of Munich, Germany.

Schilirò, D. 2013. The crisis of euro’s governance: institutional aspects and policy issues, in R.Mirdala (ed.), Financial Aspects of Recent Trends in the Global Economy, vol.II, Craiova, Asers Publishing: 150-163.

Ubide, A. 2013. Reengineering EMU for an uncertain world, International Economics, Policy Brief, n.13-4, February.

Vernon, N. 2013. A realistic bridge towards European banking union, Peterson Institute for International Economics, Policy Brief, n.13-17, June.

von Hagen, J. Eichengreen, B. 1996. Federalism, fiscal restraints, and European Monetary Union, American Economic Review, 86(2): 134-138, May.