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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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This book examines the resilience of Eurozone Economic, Monetary and Fiscal Policies and the debate surrounding Germany’s role in the Eurozone crisis. The country’s policymakers have been widely criticized for their role in causing the Euro crisis and for mishandling the crisis itself. Critics say that Germany has adopted a neo-mercantilist, beggar-thy-neighbour strategy of wage moderation which has suppressed the real exchange rates and has allowed the biggest economy in the Eurozone to enjoy an export boom in the 2000s. This in turn has undermined the competitiveness of the periphery and increased to an unsustainable level the current account balances of the Eurozone. During the crisis Germany has also been criticized for misjudging the causes of the crisis, 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 is pushing the whole continent into a depression. By misjudging the causes of the crisis, insisting on widespread austerity, rejecting the mutualization of Eurozone debt and providing financial help in little amounts and too late, Germany is perceived to be responsible for the possible breakup of the Eurozone.

One of the aims of this book is to analyse whether this description – shared by numerous policymakers, academics, pundits and opinion leaders in the EU and beyond – is fair. The academic and public debate around Germany’s role in the crisis has been largely one-sided and superficial. This book aims to fill this gap. The debate...

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