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Towards a Resilient Eurozone

Economic, Monetary and Fiscal Policies

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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After Austerity: Lessons from the Spanish Experience (Sebastián Royo)

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Sebastián Royo After Austerity: Lessons from the Spanish Experience Introduction1 Before the global crisis that hit Spain in the spring of 2008 the country had become one of Europe’s most successful economies. While other European countries had been stuck in the mud, Spain performed much better at reforming its welfare systems and labor markets, as well as improving flex- ibility and lowering unemployment. Over the decade and a half that pre- ceded the 2008 global financial crisis the Spanish economy has been able to break with the historical pattern of boom and bust, and the country’s economic performance was nothing short of remarkable (see Table 1). High levels of immigration, low interest rates, and the liberalization and modernization of the Spanish economy all contributed to this spectacular performance. Yet all this came to a halt in 2008. As a result Spain is suffer- ing one of the worst crises since the 1940s. Following the transition to democracy and the country’s European integration, Spain was, prior to the 2008 crisis, a model country. But then the dream was shattered and the country’s economy imploded after 2008. This paper seeks to explain this economic collapse, and it examines how domestic policy choices and existing institutional frameworks sharply 1 This article draws upon S. Royo, Lessons from the Economic Crises in Spain, (New York: Palgrave, 2013), S. Royo ‘Spain After the Fiesta,’ in Ronald Tiersky and Erik Jones, Eds. Europe Today, 5th Edition. (New York: Rowman and Littlefield, 2014), and S....

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