GOVERNING A SUSTAINABLE EUROZONE

Paul De Grauwe and Yuemei Ji ()

Rivista Internazionale di Scienze Sociali, 2017, vol. 125, issue 2, 173-194

Abstract: The design failures of the Eurozone have been recognized quite late and have led the Eurozone policymakers to apply wrong macro-economic policies since the eruption of the sovereign debt crisis. This has led to a dismal macroeconomic performance of the Eurozone countries as compared to the EU-countries that decided not to be part of the monetary union. We provide empirical evidence that suggests that the biggest shocks in the Eurozone were the result of business cycle movements. These were relatively well synchronised, except for their amplitude. We argue that efforts to stabilise the business cycles should be strengthened relative to the efforts that have been made to impose structural reforms, and consider the implications for the governance of the Eurozone.

Keywords: Monetary Union; Optimal Currency Areas; Business Cycle; Stabilization; Eurozone (search for similar items in EconPapers)
JEL-codes: F41 F44 F45 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:vep:journl:y:2017:v:125:i:2:p:173-194

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