Political legitimacy in a non-optimal currency area

Fritz W. Scharpf

No 13/15, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: On the basis of a brief reconstruction of the causes and impacts of the euro crisis, this paper explores, counterfactually and hypothetically, whether the new euro regime, insisting on fiscal austerity and supply-side reforms, could have prevented the rise of the crisis or is able to deal with its disastrous economic and social impact. A comparison with the likely impact of transfer-based Keynesian reflation suggests that, in both cases, economic success is uncertain, while both approaches are likely to produce severely negative side-effects. In light of such dismal policy choices, attempts to politicize European election campaigns are more likely to provoke unmanageable policy conflict than to overcome the input-oriented, democratic deficit of European economic governance.

Date: 2013
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:mpifgd:1315

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