Economic, Monetary and Fiscal Policies
Edited By John Ryan
Towards a Resilient EMU? The German-Inspired Response to the Euro Crisis Assessed (Lothar Funk)
Lothar Funk Towards a Resilient EMU? The German-Inspired Response to the Euro Crisis Assessed Germans: Allegedly ‘bad Europeans’ Many people especially in crisis-afflicted countries have been extremely dissatisfied with the state of European Union (EU) and especially the European Monetary Union (EMU) for the last years. Who is to be blamed? For many observers, particularly those outside of Germany and some other Northern European countries (for example Finland and the Netherlands) with a similar financial ‘stability culture’ as in the Federal Republic, the answer appears to be obvious that foremost Germany with the largest Western European economy has to be seen as the scapegoat, as the following quotation by a leading op-ed commentator and US Keynesian economist in his piece ‘Being bad Europeans’ demonstrates: Why is Europe in such dire straits? The conventional wisdom among European policy makers is that we’re looking at the price of irresponsibility: Some govern- ments have failed to behave with the prudence a shared currency requires, choosing instead to pander to misguided voters and cling to failed economic doctrines. And if you ask me (and a number of other economists who have looked hard at the issue), this analysis is essentially right, except for one thing: They’ve got the identity of the bad actors wrong. For the bad behavior at the core of Europe’s slow-motion disaster isn’t coming from Greece or Italy, or France. It’s coming from Germany … In other words, to the extent that there’s anything like a competitiveness problem in Europe, it’s overwhelmingly...
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