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The History of the European Monetary Union

Comparing Strategies amidst Prospects for Integration and National Resistance

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Edited By Daniela Preda

The financial and economic crisis that hit Europe in 2009 brought out the precariousness of the monetary union, accentuating the economic disequilibrium among European nations and strengthening Euro-skepticism.

The crisis served as a catalyst for long-standing and unresolved problems: the creation of a singly monetary area with intergovernmental control, the final act in the construction of a Europe economically united but without a government and a state; the consequent discrepancy between forming a consensus that remains in large part national and the political dynamics in Europe; the sustainability of a monetary union in the absence of an economic-social union, which presents again the long-standing debate between "monetarist" countries and "economist" countries.

This book aims at placing current events within a long-term framework composed of a mosaic of multidisciplinary contributions that can provide the reader with keys which are adequate for an understanding of these events and useful for opening up new horizons.

The book begins with a look at 20th-century monetary unification projects in an attempt at reconstructing the long road toward the single currency: the first monetary unification projects in the 1950s and 1960s; the turbulence of the 1970s; the new impetus given by the European Monetary System to the cohesion among European countries; the causes of the 1992 crisis; and the long struggle for the Monetary Union, which would end at Maastricht. Finally, it focuses on the most recent events – the creation of the Eurozone and its crisis – starting from the turbulent years of the first decade of the new millennium and ending on May 31, 2016, just before the Brexit referendum.

The book focuses on analyzing the strategies undertaken during the monetary unification process, underscoring, on the one hand, the conviction of the Founding Fathers of the EMU that a single currency would favor further progress toward a more stringent economic and political integration, and on the other the continuing national resistance to the transfer of sovereignty from the national states to the European Union.

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Fiscal Discipline and Growth within EMU (Alberto Majocchi)

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Fiscal Discipline and Growth within EMU

Alberto MAJOCCHI

After about ten years from the starting of the crisis in the United States, economic growth is still weak within Europe. The benefits that were supposed to derive from the adoption of a single currency have been upset by an austerity policy that has been enforced on the large majority of European countries, following the wrong idea that the origin of the crisis was linked to the irresponsible governments’ behaviour in the management of the public finances, especially in the Southern Member States. Consolidation of public finances is certainly unavoidable, but must be backed by expansionary measures pursued at the European level. If this is not the case, the decline in the level of national income brings about a fall in tax revenues, while expenditures are increased for providing benefits to the unemployed and support to firms facing a decreasing level of domestic demand. As a consequence, deficits grow larger and new austerity measures are needed.

In this paper we will try to survey the evolution of the European policy regarding the constraints on the behaviours of Member States in the field of public finance, starting from Maastricht and going through the Stability and Growth Pact, up to the Fiscal Compact. Having remarked the limits of these policy choices, we will explore a possible alternative, i.e. a policy promoting investments and production of public goods. In this perspective the Juncker Plan represents a...

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