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Towards a Resilient Eurozone

Economic, Monetary and Fiscal Policies

Edited By John Ryan

This book examines the Eurozone crisis and the possibility of fiscal and political union in Europe, with contributions from some of the most respected experts on these topics. The book explains the complex, multidimensional crises in competitiveness, fiscal matters, banking and politics. During the crisis Germany has been criticized for misjudging the causes, focusing too much on fiscal deficits and insisting that the solution is fiscal consolidation and austerity. For many, especially those inspired by Keynesian economics, Germany has been seen as pushing the whole continent into a depression. By misjudging the causes of the crisis, insisting on widespread austerity, constraining the European central Bank (ECB) in its role of Lender of Last Resort for the sovereigns, rejecting the mutualization of Eurozone debt and providing financial help in small amounts and too late, Germany is perceived to be responsible for the possible break-up of the Eurozone. The aim of this book is to analyse whether this description, one that is shared by numerous policymakers, academics, pundits and opinion leaders, means that there is a lack of resilience in the Eurozone’s economic, monetary and fiscal policies.


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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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