A Cultural Clash View of the EU Crisis

Luigi Guiso, Helios Herrera () and Massimo Morelli ()

No 1321, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: If voters of different countries adhere to different and deeply rooted cultural norms, when these countries interact their leaders may find it impossible to agree on efficient policies especially in hard times. Political leaders' actions are bound by a "conformity constraint" that requires them to express policies that do not violate these norms. This inhibits politicians from adopting the optimal policies as they may clash with either one or the other of the cultures of the interacting countries. We model this mechanism and argue that conformity constraints and cultural clash can help us understand the poor management of the Greek crisis and the resulting European Sovereign debt crisis. We show the conditions under which the introduction in Europe of a fiscal union can be obtained with consensus and be beneficial.Perhaps counter-intuitively, cultural diversity makes a fiscal union even more desirable.

Pages: 48 pages
Date: 2013, Revised 2013-07
New Economics Papers: this item is included in nep-cdm, nep-cul and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.eief.it/files/2013/09/wp-21-a-cultural- ... of-the-eu-crisis.pdf (application/pdf)

Related works:
Working Paper: A Cultural Clash View of the EU Crisis (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:1321

Access Statistics for this paper

More papers in EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF) Contact information at EDIRC.
Bibliographic data for series maintained by Facundo Piguillem ().