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E-book The Politics of Bad Options Why the Eurozone's Problems Have Been So Hard to Resolve

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Penilaian

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The Eurozone crisis began in late 2009. It followed in the wake of the globalfinancial crisis and quickly developed into one of the most serious economic andpolitical crises in the history of the European Union (EU). Nonetheless, after adecade of unsuccessful attempts to resolve the fundamental structural and insti-tutional issues that underlie the Eurozone’s problems, a long-term reform thataddresses these problems remains elusive (Mody 2018). Although no country sofar has seriously entertained the idea of leaving the Eurozone, the monetaryunion’s problems are far from resolved. The dominant approach has been toforce the countries hit hardest by the Eurozone crisis to implement unprecedentedausterity. These policies have resulted in a huge loss in confidence in nationalgovernments (Foster and Frieden 2017; Kriesi 2012), the EU (Hobolt 2015; Hoboltand de Vries 2016a), and democracy more generally (Armingeon and Guthmann2014; Cramme and Hobolt 2014; Streeck and Schäfer 2013), and they have helpedpave the way for the rise of Eurosceptic parties across the Eurozone (Bellucci et al.2012; Kriesi and Pappas 2015; Usherwood and Startin 2013). Despite thesefundamental challenges, no consensus about how to fundamentally reform themonetary union has emerged (for a review, see Sadeh 2018). Although the EU hasof late been battling with other crises as well, the unresolved problems of theEurozone remain the Union’s Achilles’heel.The inability or unwillingness of Eurozone governments to change course intheir attempts to resolve the Eurozone’s problems is particularly puzzling becausethe European approach to resolving the crisis has been very unusual. TheEurozone crisis is in its essence both a classic debt and balance-of-payments(BOP) crisis, caused by huge imbalances in capital and tradeflows (Baldwinet al. 2015; Lane 2013; Wihlborg et al. 2010). Such crises are costly: Debts haveto be repaid or written off to address the debt problem, and macroeconomicpolicies have to be adjusted to prevent a further build-up of debts in the future.This means that not just the problem of the stock of debts has to be resolved, butalso theflow problem, because debts owed to foreign actors usually accumulate inthe wake of an extended period of current account deficits which by definition alsoimply a capital account deficit (both are contained as mirror images in the balance of payments). Countries with current account deficits thus not only import moregoods and services than they export, but also experience net capital inflows.Debtor countries therefore need to reduce not just the accumulated debts butalso their current account deficit; they do so by implementing austerity and othermeasures to reduce spending, repay their debts, reduce imports, and stimulateexports. These adjustments become necessary irrespective of whether the crisiswas predominantly caused byfinancialflows or byflows of goods and services.

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Ketersediaan

Informasi Detail

Judul Seri

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No. Panggil

332 WAL t

Penerbit

London : Oxford University Press., 2023

Deskripsi Fisik

321 hlm

Bahasa

English

ISBN/ISSN

9780198857013

Klasifikasi

332

Tipe Isi

text

Tipe Media

computer

Tipe Pembawa

online resource

Edisi

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Subjek

Financial Economics, Finance

Info Detail Spesifik

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Pernyataan Tanggungjawab

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Versi lain/terkait

Lampiran Berkas

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