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2017 | Buch

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Europe and the Euro

Integration, Crisis and Policies

verfasst von: Enrico Marelli, Marcello Signorelli

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book offers a fresh perspective on the recent Eurozone "double crisis" and its related economic policies. The authors present empirical evidence which sheds new light on the growing economic and political debate on the future of the Euro, the Eurozone and the EU. The book investigates and assesses the impact of the crisis with particular reference to monetary and fiscal policy, whose protracted austerity approach has dampened economic growth. In their discussion of the long-run European integration process, the authors emphasize the original weaknesses in the construction of the European Monetary Union and examine its failure to respond to the recent crisis. The concluding chapter focuses on the need for crucial reform in European governance and discusses the impact of the UK’s recent EU membership referendum. Scholars, students and members of the general public with an interest in the future of the Eurozone will find this work thought-provoking, instructive and highly informative.

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Inhaltsverzeichnis

Frontmatter

1. A Progressively Integrated European Community within the Global Economy

Abstract

This chapter illustrates the integration process of the European Union (EU), focusing both on the ‘deepening perspective’ (from the original European Economic Community and Customs Union to the Single Market) and on the ‘widening viewpoint’ (from the initial 6 members to the current 28, including enlargement to the East with the admission of several formerly planned economies, and the United Kingdom for the time being). It also considers competition policy and structural funds. It then evidences the weight and composition of the EU budget, with a brief discussion of its evolution over time. The EU’s integration process is assessed within the globalization trend, including evidence on the economic weight – of EU countries and the EU as a whole – in the world economy.

Enrico Marelli, Marcello Signorelli

2. The European Monetary Union and OCA Theories: A Common Currency Awaiting a Real Economic Union

Abstract

After a brief description of the functioning of the European Monetary System and its crisis, this chapter analyses the objectives and content of the Maastricht Treaty, including the convergence criteria for admission to the Economic and Monetary Union (EMU). The judgment on the EMU’s construction is made by considering the Optimal Currency Area theories. The chapter also includes an account of empirical evidence on ‘real convergence’ – which is juxtaposed to ‘nominal’ and ‘institutional’ convergence – in the Eurozone, compared with the European Union as a whole. The empirical investigation is completed by analysing cycle correlations, sensitivity to the average EU cycle and trade intensity.

Enrico Marelli, Marcello Signorelli

3. Monetary Policy and the European Central Bank: A Progressive Divorce from the Bundesbank Legacy?

Abstract

This chapter begins with consideration of the key features of the European Central Bank (ECB), from its institutional set-up to its main economic features (such as the much debated independence and conservatism). The ECB’s operation and behaviour – concerning inflation (and other final goals), monetary strategies and key instruments (key interest rates) – are investigated through comparisons with those of other central banks (in particular the Federal Reserve in the United States).

Enrico Marelli, Marcello Signorelli

4. Fiscal Policies and the EU’s Governance: Only Rules and a Lack of Stabilisation Measures

Abstract

The chapter begins with an illustration of the perceived low default risk in the first decade after the birth of Economic and Monetary Union (EMU), together with an explanation of the rationale behind the rules on public budgets applied to members of monetary unions. It then illustrates the deterioration of public accounts and sovereign debts that has occurred since the recent crises that hit the euro area. The chapter also explains the content of the Stability and Growth Pact (SGP, and its various reforms) and the Fiscal Compact. Critical discussion is conducted of the ‘austerity policies’ adopted in the Eurozone in recent years, emphasising their deep impact on the real economies, especially of the weakest euro area countries, and the ‘self-defeating’ nature of such policies.

Enrico Marelli, Marcello Signorelli

5. The Double Crisis in the Eurozone: Recession, Stagnation and High Unemployment

Abstract

The chapter, after illustrating the main events characterising the global financial crisis and the Great Recession, reviews the (generally prompt) economic policy responses in the principal economies of the world. It then focuses on the sovereign debt crisis affecting some Eurozone countries, especially in the periphery, showing how the ‘spreads’ of the Portugal, Ireland, Italy, Greece, Spain (PIIGS) suddenly increased and contagion occurred. The impact on real economic activity is investigated by stressing the fall in aggregate demand and its components (with widening output gaps), and the dire consequences on unemployment, particularly of young people.

Enrico Marelli, Marcello Signorelli

6. The EU’s Policy Response: Too Little Too Late

Abstract

The chapter first illustrates the initial policy response following the sovereign debt crisis: despite the creation of the ‘save-State’ funds (European Financial Stability Facility, EFSF, and European Stability Mechanism, ESM), executed through the ‘troika’, the EU’s reaction was delayed and inadequate. The lack of effective crisis-management mechanisms (e.g. ‘Eurobonds’) is also emphasised. In regard to monetary policy, a complete account is provided of the ‘unconventional measures’ introduced by the ECB, including the Outright Monetary Transactions (OMT) plan, which has been crucial for ‘saving the euro’, and the quantitative easing (QE) adopted chiefly to fight deflation and reinforce economic recovery. The effectiveness of such measures has been limited also because the banking union is not yet complete. Finally, the EU’s structural policies (Lisbon agenda and ‘Europe 2020’ plans) are evaluated.

Enrico Marelli, Marcello Signorelli

7. The Need for Innovative Policies and Further Integration: A Real ‘Economic and Monetary’ Union Leading to a Future Political Union?

Abstract

The chapter emphasises the need for radical changes in EU policies and governance. In the short run, there is an urgent need for an aggregate demand shock exerted through a European plan of public investment (much more extensive than the Juncker plan). This plan, possibly accompanied by the issue of Project Eurobonds, would also stimulate private investments. In regard to long-run reforms, it is necessary to complete the monetary union, with the creation of a Eurozone budget, a Eurozone Finance Minister, etc., in order to realise a Fiscal Union. Thus, a ‘genuine’ Economic Union could be the basis for a future political union. This scenario is the desirable alternative to the possible dissolution of the Eurozone – or even the European Union (EU) as a whole – that could be triggered by the Brexit event.

Enrico Marelli, Marcello Signorelli

Backmatter

Titel: Europe and the Euro
verfasst von: Enrico Marelli
Marcello Signorelli
Copyright-Jahr: 2017
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-45729-1
Print ISBN: 978-3-319-45728-4
DOI: https://doi.org/10.1007/978-3-319-45729-1

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