The endless Eurozone crisis, where do we stand? A Classical-Kaleckian overview

Sergio Cesaratto ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: It is not easy to untangle the logic that in the past led to creation of the European Monetary Union (EMU) and that is currently guiding the prevailing Eurozone (EZ) policies. Although lacking the right institutions, which can be seen as the ultimate root of its crisis, the ten years of the EMU could be celebrated in 2008 with some fanfare. The EMU even seemed a success, judged from the point of view of imbalanced growth of some peripheral countries that masked its deflationary stance. This imbalanced growth was the proximate cause of the EZ financial crisis. In the paper we shall review the main causes of the EZ financial crisis, interpreted as a balance of payments crisis; the role of the European payment system TARGET 2 in buffering its violent blast; the Classical-Kaleckian rationale of the German malevolent mercantilism; the inadequate EZ policy measures to respond to the crisis; possible alternative solutions. Unfortunately, rather than pushing towards the creation of a different set of European institutions, the prevailing crisis resolution philosophy resembles a late vindication of the original deflationary Euro-bias.

Keywords: European Monetary Union; financial crisis; Germany; neo-mercantilism; balance of payment; capital flows; sudden stops; TARGET 2; OMT (search for similar items in EconPapers)
JEL-codes: E11 E12 E42 E58 F32 F33 F34 F36 N24 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-eec, nep-mac, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: The endless eurozone crisis, where do we stand? a classical-kaleckian overview (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:671

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