European Monetary Union and the COVID-19 Crisis: A Tightrope Act with the Risk of Falling

Michael Heine and Hansjörg Herr ()
Additional contact information
Michael Heine: HTW University of Applied Sciences
Hansjörg Herr: Berlin School of Economics and Law

A chapter in New Challenges for the Eurozone Governance, 2021, pp 23-43 from Springer

Abstract: Abstract The COVID-19 crisis has the potential to lead to long-term stagnation in the European Monetary Union (EMU). Especially the following challenges can be identified: a lack of labour market institutions can lead to nominal wage cuts and deflation; the lack of a strong fiscal centre can lead to an insufficient long-term stimulation after the COVID-19 recession; high levels of debt and non-performing loans can hamper growth; the insufficient real convergence can add to political destabilization. The Great Depression in the 1930s and the long-term stagnation in Japan after the asset market bubble in the 1980s support these arguments. The European Central bank, as the only powerful supranational institution, follows overall a good policy but one that is not sufficient to stabilize a monetary union. A more comprehensive integration of the EMU is needed to prevent the danger of its breakdown.

Keywords: COVID-19; EMU; Great Depression; European integration (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-62372-2_2

Ordering information: This item can be ordered from
http://www.springer.com/9783030623722

DOI: 10.1007/978-3-030-62372-2_2

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().