The current economic and debt crisis in eurozone and crisis of grand theories of European integration

Human Affairs ◽  
2013 ◽  
Vol 23 (3) ◽  
Author(s):  
Dušan Leška
Keyword(s):  
European Integration ◽  
Euro Area ◽  
Social Constructivism ◽  
Debt Crisis ◽  
Economic Recession ◽  
Banking Union ◽  
Common Currency ◽  
Eu Member States ◽  
Liberal Intergovernmentalism ◽  
The Common

AbstractThe economic and debt crisis threaten many eurozone countries and the very existence of the common currency, the euro. The crisis has meant that some special mechanisms have had to be created (EFSF, ESM) and the introduction of special procedures in heavily indebted countries. The deepening of the crisis and the economic recession in the euro area have resulted in the growth of nationalism and anti-European sentiments in EU member states. Resolving the crisis, however, requires further convergence of the eurozone countries, the formation of a fiscal union and a banking union. At the same time, the crisis has shown that the grand theories of European integration, neo-functionalism and liberal intergovernmentalism, have failed to provide answers to the questions raised by the crisis, and this has led to the growing importance of social constructivism.

scholarly journals Recent Patterns of Economic Alignment in the European (Monetary) Union

2021 ◽  
Vol 14 (8) ◽  
pp. 362
Author(s):  
Agnieszka Gehringer ◽  
Jörg König
Keyword(s):  
European Union ◽  
Monetary Policy ◽  
Business Cycle ◽  
Euro Area ◽  
Debt Crisis ◽  
Policy Instruments ◽  
Economic Indicators ◽  
The European Union ◽  
Business Cycle Synchronization ◽  
The Common

This paper studies the process of business cycle synchronization in the European Union and the euro area. As our baseline methodology we adopt rolling window correlation coefficients of various economic indicators, observed since 2000. Among the indicators, we distinguish between real economic indicators, like the real GDP growth and unemployment, and nominal indicators, like inflation and government budget. Given the direct implication of this kind of analysis for the common monetary policy of the European Central Bank (ECB), special attention is paid to the pattern of business cycle synchronization in the core and peripheral members of the euro area. Our analysis of quarterly data covering the first two decades of the euro area shows that there was a certain synchronization tendency in the first years of the common currency. However, the European debt crisis halted the economic integration within the European Union and—even more so—within the euro area. Since the ECB can to a large extent intervene only with “one-size-fits-all” monetary policy instruments, this renders increasingly cumbersome the conduct of stabilisation policies within the euro area.

scholarly journals The Resilience of the Euro

2021 ◽  
Vol 35 (2) ◽  
pp. 3-22
Author(s):  
Philip R. Lane
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Public Debt ◽  
Risk Premia ◽  
Policy Support ◽  
Economic Recovery ◽  
Common Currency ◽  
Institutional Reforms ◽  
Fiscal Capacity ◽  
The Common

Over 2014 – 2019, the euro area charted a substantial post-crisis economic recovery while also reducing macro-financial vulnerabilities. The array of post-crisis institutional reforms has improved the capacity of the euro area to withstand adverse shocks, even if the narrowing of imbalances also came at a high cost (especially in the most indebted member countries). The pandemic has provided a new test: the combination of a common central bank and the enlargement of the common fiscal capacity has provided substantial policy support and fostered a narrowing in risk premia, despite significant differences in levels of public debt and exposures to the pandemic shock. While the resilience of the euro is sure to be tested further in the coming years, the extent of the underlying political backing for the common currency should not be underestimated.

scholarly journals Euro Crisis and the EMU Institutional Reforms

Equilibrium ◽  
2013 ◽  
Vol 8 (1) ◽  
pp. 7-31 ◽  
Author(s):  
Jarosław Kundera
Keyword(s):  
Euro Area ◽  
Debt Crisis ◽  
Essential Element ◽  
Monetary Integration ◽  
Banking Union ◽  
Fiscal Policies ◽  
Euro Crisis ◽  
Institutional Reforms ◽  
Political Union ◽  
The Eu

The main goal of this article is to find the answer for the question about the necessary reform to be undertaken in the EU to save the euro as a common currency. The author envisages three scenarios of the euro area’s future development. In his opinion, the most probable one are the institutional reforms in the euro area. The essential element of the reform is to establish a proper mix between the ECB’ monetary policy and fiscal policies in the member states. All proposed steps against the euro crisis are mutually correlated: monetary integration requires stricter fiscal integration, fiscal integration requires banking union, but banking union is going to require some form of a political union. This way the debt crisis in the euro area may present an opportunity to renew the strength of the European institutions.

scholarly journals Krisen i eurozonen: historien om en forudsigelig krise – der kunne have været undgået

Politik ◽  
2013 ◽  
Vol 16 (1) ◽  
Author(s):  
Henrik Plaschke
Keyword(s):  
Sovereign Debt ◽  
Debt Crisis ◽  
Public Spending ◽  
Balance Of Payments ◽  
General Strategy ◽  
Economic Policies ◽  
Sovereign Debt Crisis ◽  
Common Currency ◽  
The Common ◽  
European Periphery

The crisis in the Eurozone is part of a general structural crisis with both global and regional dimensions. e US generated nancial crisis was imported into the Eurozone due to the structural weaknesses and accumu- lated tensions built up during the years following the introduction of the common currency. ese tensions express themselves in an accumulation of private debts and in huge balance-of-payments imbalances within the Eurozone. e sovereign debt crisis is the result of these weaknesses and tensions rather than their cause. By insisting on reductions on public spending as a general strategy for the Eurozone economic policies have aggravated not only the situation of the South European periphery of the Eurozone but increasingly also its Northern core. However, the Eurozone is unlikely to break up – rather we are heading for a period of mud- dling through characterized by growing inequalities, social and political tensions and stagnating economic growth. 

scholarly journals State Contingent Debt as Insurance for Euro Area Sovereigns

2019 ◽  
Vol 5 (1) ◽  
pp. 64-90
Author(s):  
Maria Demertzis ◽  
Stavros A Zenios
Keyword(s):  
Risk Reduction ◽  
Euro Area ◽  
Risk Sharing ◽  
Banking Union ◽  
European Monetary ◽  
Institutional Reforms ◽  
Eu Member States ◽  
Safety Regulations ◽  
Banking Institutions ◽  
European Monetary Fund

Abstract The authors provide a novel angle to the ongoing discussions by the G20 on sovereign contingent debt and argue that contingent debt could provide market-based insurance to protect the euro area from future debt crises. Risk-sharing with the markets is a practical way forward in the context of the Franco-German debate on risk-sharing among EU member states vs system-wide risk reduction. The financial innovation of contingent debt is a feasible euro area reform that would not introduce risk-sharing between states or require institutional reforms or Treaty changes. However, coordination would be needed. The authors’ suggestion fills a gap in the proposals on the completion of the banking union and the possible establishment of a European Monetary Fund (EMF). These proposals offer institutions-based solutions to crises, with the banking union providing safety regulations that will make banking institutions more resilient, while the EMF will be a ‘fire brigade’ to be called on in emergencies. What has not been tapped are the markets, whose tolerant behaviour to sovereign demands encouraged the build up of debt, while their finicky response exacerbated the crisis.

scholarly journals COMPARATIVE ANALYSIS OF STRUCTURAL Σ-CONVERGENCE OF EXPORTS

2020 ◽  
Author(s):  
Vera Pirimova ◽  
Keyword(s):  
Comparative Analysis ◽  
Euro Area ◽  
Graphical Form ◽  
Economic Convergence ◽  
Common Currency ◽  
Dissimilarity Index ◽  
Index Method ◽  
Analysis And Synthesis ◽  
The Common ◽  
Degree Of Similarity

The paper analyses the structural σ-convergence of exports of six CEE countries to the Euro area. The countries are Estonia, Latvia, Lithuania, Slovakia, and Slovenia, which are members of the Euro area, as well as Bulgaria, which was included in the ERM II currency mechanism on 10.07.2020. The main goals are to measure and compare the structural σ-convergence of exports of the six CEE countries and to prove whether the introduction of the common currency (the euro) has an impact on the convergence. The research consists of the theoretical and empirical parts. The theoretical part systematizes basic concepts of economic, trade, club, and structural convergence. One index method used by his authors to study economic convergence has been adapted to the structural σ-convergence of exports. This is the dissimilarity index of Von Hagen and Traistaru. In the empirical part, the values of the index, by commodity groups, according to SITС, Rev. 4, for the six countries during the period 2002-2018 are determined. The index is calculated also as aggregated, referring to the total exports of the selected countries and for the whole period. The results are presented in graphical form. Based on them, the structural and dynamic characteristics of the convergence and divergence of exports of the six countries compared to the exports of the Euro area are derived. Conclusions are made about achieved the different degree of similarity, that is uncertain and unstable and so the convergence can be only partially attributed to the adoption of the euro. Methods of analysis and synthesis, induction and deduction, methods of the empirical index, and comparative analysis are applied.

scholarly journals Towards a more resilient euro area

2019 ◽  
Vol 8 (2) ◽  
pp. 106
Author(s):  
Esther Gordo ◽  
Ivan Kataryniuk
Keyword(s):  
Euro Area ◽  
Capital Markets ◽  
Risk Sharing ◽  
Common Currency ◽  
Monetary Unions ◽  
Economic Resilience ◽  
Currency Area ◽  
The Us ◽  
The Common ◽  
Lower Capacity

The euro area has shown lower capacity to resist shocks than other monetary unions, such as the US. One possible determinant is the lack of risk-sharing mechanisms. In this article, we estimate the risk-sharing capacity of the Euro Area according to the Asdrubali et al. (1996) methodology. The results show that the degree of risk-sharing is low in the euro area, in particular, due to underdeveloped capital markets and the lack of a central fiscal capacity. We suggest venues of reform to increase the economic resilience of the common currency area.

scholarly journals The European Sovereign Debt Crisis

2012 ◽  
Vol 26 (3) ◽  
pp. 49-68 ◽  
Author(s):  
Philip R Lane
Keyword(s):  
Crisis Management ◽  
Euro Area ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Banking Union ◽  
Sovereign Debt Crisis ◽  
European Level ◽  
Original Design ◽  
European Sovereign Debt Crisis ◽  
Crisis Conditions

The origin and propagation of the European sovereign debt crisis can be attributed to the flawed original design of the euro. In particular, there was an incomplete understanding of the fragility of a monetary union under crisis conditions, especially in the absence of banking union and other European-level buffer mechanisms. Moreover, the inherent messiness involved in proposing and implementing incremental multicountry crisis management responses on the fly has been an important destabilizing factor throughout the crisis. After diagnosing the situation, we consider reforms that might improve the resilience of the euro area to future fiscal shocks.

scholarly journals Aspects of divergence in the Euro Area

2020 ◽  
pp. 9
Author(s):  
Nicos Christodoulakis
Keyword(s):  
Euro Area ◽  
Capita Income ◽  
Capital Formation ◽  
Common Currency ◽  
Policy Initiatives ◽  
Convergence Process ◽  
Quality Of Institutions ◽  
The Common ◽  
Per Capita

The paper examines how the convergence process between the less and the more developed members of the Euro Area weakened significantly after the circulation of the common currency, and subsequently reversed course in the postcrisis recession. The front-loaded consolidation programs that followed the bailouts in the over-indebted economies caused asymmetric losses in per capita income in the peripheral countries and led to further North-South polarization. The paper identifies public indebtedness, quality of institutions and capital formation as the areas where divergences are more pronounced and suggests that policy initiatives to encourage more investment and a faster institutional assimilation are needed for the convergence process in the Euro Area to take off again.

scholarly journals Foreign trade and the theory of optimum currency areas. Implications for Poland

2016 ◽  
pp. 5-26
Author(s):  
Iwona Maciejczyk-Bujnowicz
Keyword(s):  
Exchange Rate ◽  
Euro Area ◽  
Statistical Data ◽  
Common Currency ◽  
Eu Member States ◽  
Currency Area ◽  
The Subject ◽  
Optimum Currency ◽  
High Degree ◽  
High Share

The paper focuses on one of the aspects of the OCA theory and on a new endogenous approach analysing mutual trade links of the countries in a common currency area. According to Kinnon (1963), a high degree of openness of the candidate countries is a precondition for establishing an OCA. Thus, the area can be created by countries with a high share of exports and imports in their GDP. The more open an economy, the higher the importance of the exchange rate for prices. We reviewed the literature on selected studies on the subject and analysed statistical data describing Poland’s trade in the years 2000–2010 with the euro area and EU member states outside of it.

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