Core-periphery relations in the Eurozone

Paul De Grauwe and Yuemei Ji (yuemei.ji@ucl.ac.uk)

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We argue that the case for the existence of some deterministic force that condemns countries in the periphery to stay in the periphery indefinitely, is weak. Countries that are in the periphery today can become part of the core and vice versa. We also argue that the long run success of the Eurozone depends on a continuing process of political unification. Political unification is needed because the Eurozone has dramatically weakened the power and legitimacy of nation states without creating a nation at the European level. This is particularly true in the field of stabilization. The political willingness to go in this direction, however, is non-existent today. There is no willingness to provide a common insurance mechanism that would put taxpayers in one country at risk of having to transfer money to other countries. Under those conditions the sovereign bond markets in the Eurozone will continue to be prone to instability.

JEL-codes: E6 J1 (search for similar items in EconPapers)
Date: 2018-11-21
New Economics Papers: this item is included in nep-ore
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Citations: View citations in EconPapers (2)

Published in The Economists' Voice, 21, November, 2018. ISSN: 1553-3832

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Related works:
Journal Article: Core-Periphery Relations in the Eurozone (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:91328

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