The Eurocrisis: Muddling Through, or On the Way to a More Perfect Euro Union?

Joshua Aizenman

No 20242, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper looks at the short history of the Eurozone through the lens of an evolutionary approach to forming new institutions. The euro has operated as a currency without a state, under the dominance of Germany. This has so far allowed the euro to achieve a number of design objectives, and this may continue, as long as Germany does not shirk its growing responsibility for the euro's future. Germany's resilience and dominant size within the EU may explain its "muddling-through" approach towards the Eurozone crisis. We review several manifestations of this muddling through process. Greater mobility of labor and lower mobility of under-regulated capital may be the costly "second best" adjustment until the arrival of more mature institutions in the Eurozone.

JEL-codes: F32 F36 F41 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-eec, nep-mon and nep-opm
Note: IFM
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Published as Joshua Aizenman, 2015. "The Eurocrisis: Muddling through, or on the Way to a More Perfect Euro Union?," Comparative Economic Studies, vol 57(2), pages 205-221.

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