Financial and real crisis in the Eurozone and vulnerable economies

Bruno Dallago

European Journal of Comparative Economics, 2013, vol. 10, issue 3, 295-315

Abstract: The paper looks at the deep and the direct causes of the crisis in the Eurozone and considers what changes are necessary. It shows that, together withfinancial aspects, the Eurozone crisis stems from the difficulties of the real economy and the incompleteness of European institutions. The former include divergent real performances, unsustainable development paths of the Member States, and growing distributive disparities. The consequences of misconceived stabilisation policies magnified the effect of the above factors. The international crisis caused a shock that has had asymmetric effects within the Eurozone due to the divergent economic performances and the different institutions of the member countries. At the same time, European institutional incompleteness deprived member countries of effective policy-making and European policy management and support, thus converting the common currency into a problematic asset. Building on thisframework, the paper critically analyses the institutional and economic reforms necessary to vitalise the process of European integration, and it stresses the urgent need to tackle the real and microeconomic causes ofthe crisis.

Keywords: European institutions; Eurozone; Financial crisis; Real economy; Vulnerability (search for similar items in EconPapers)
JEL-codes: E02 E63 E65 G01 O52 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:liu:liucej:v:10:y:2013:i:3:p:295-315

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