The Burden of Public Debt and the European Stability Mechanism

Horst Tomann
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Horst Tomann: Freie Universitaet (FU) Berlin

Chapter 8 in Monetary Integration in Europe, 2017, pp 151-166 from Palgrave Macmillan

Abstract: Abstract Chapter 8 draws on an early, tentative analysis of John Maynard Keynes, his famous ‘Economic Consequences of the Peace’ of 1920 which focuses on two distinct deficiencies of the time, excessive external government debt and external (macroeconomic) imbalances. With reference to Keynes, the chapter analyses the specific stock-flow inconsistency of monetary relations in the euro area and, taking Greece as an example, discusses solvency conditions for governments. Turning to the rescue measures taken by the European Council, these are assessed as short-term solutions compared to the measures Keynes had proposed. The focus on austerity has as a consequence that stock-flow inconsistency continues to exist.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:stuchp:978-3-319-59247-3_8

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DOI: 10.1007/978-3-319-59247-3_8

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