Forced structural convergence in the eurozone: Or a differentiated European monetary community

Fritz W. Scharpf

No 16/15, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: Eight years after the onset of the "Great Recession," the eurozone is deeply split between "Northern" EMU economies that seem to be doing reasonably well and "Southern" countries that continue to struggle with socioeconomic catastrophe. This paper argues that the continuing malaise is a consequence of the structural diversity among Northern and Southern economies and of an asymmetrical euro regime that must try to enforce the structural convergence of their political economies. The present regime is vulnerable, however. It may fail economically should its rules have to be relaxed, and it may fail politically should it no longer be possible to suppress North-South conflicts. In light of these risks, the paper concludes by presenting the outline of a differentiated European Currency Community that would accommodate structurally diverse but highly interdependent economies in a flexible two-level regime.

Keywords: Europe; monetary union; structural convergence; democracy; Europa; Währungsunion; strukturelle Konvergenz; Demokratie (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:mpifgd:1615

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