Can Europe Prosper Without the Common Currency? A Historical Perspective
DOI:
https://doi.org/10.6000/1929-7092.2017.06.11Keywords:
European Integration, Monetary Union, Eurozone, Economic History EuropeAbstract
The Eurocrisis displays an astonishing similarity to the causes of the Great Depression in the form of massive current account imbalances, destabilising capital flows, financial fragility, and the commitment to defending a fixed exchange rate arrangement by means of austerity and internal devaluation. From the interwar economic and political disaster Europe eventually drew the lesson that internal balance had to enjoy priority over external balance, giving rise to a three-decade long period of unprecedented economic growth after the Second World War. As Europe has again stumbled into many of the policy errors that caused the Great Depression, it will need to relearn some of these lessons. In particular, the paper suggests that Europeanisation has gone too far and that rather than completing the monetary Union, Europe's prosperity and political stability would be better served by compartmentalisation of financial markets, vertical industrial policies and an escape clause in the common currency allowing for temporary exit in case of fundamental disequilibria.
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Ackland, Robert, Steve Dowrick & Benoit Freyens (2013), “Measuring Global Poverty: Why PPP Methods Matter.” The Review of Economics and Statistics, 95(3): 813-824.
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Battilossi, Stefano, James Foreman-Peck & Gerhard Kling (2010), “Business Cycles and Economic Policy, 1945–2007” In: Stephen Broadberry & Kevin H. O’Rourke, eds., The Cambridge Economic History of Modern Europe Volume 2: 1870 to the Present. Cambridge. Cambridge University Press.
https://doi.org/10.1017/cbo9780511794841.016
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https://doi.org/10.1017/CBO9780511791109
Bernstein, William (2008), A Splendid Exchange. London: Atlantic Books.
Bispham, John, & Andrea Boltho (1982), “Demand Management.” In Andrea Boltho, ed., The European Economy: Growth and Crisis. Oxford: Oxford University Press.
Blanchard, Olivier (2004), “The Economic Future of Europe.” The Journal of Economic Perspectives 18(4): 3-26.
https://doi.org/10.1257/0895330042632735
Blyth, Mark (2013), Austerity. The History of a Dangerous Idea, Oxford: Oxford University Press.
Boeri, Tito & Pietro Garibaldi (2009), “Beyond Eurosclerosis”, Economic Policy, July 2009: 410 – 461.
https://doi.org/10.1111/j.1468-0327.2009.00225.x
Bofinger, Peter, Jürgen Habermas & Julian Nida-Rümelin (2012), “Einspruch gegen die Fassadendemokratie” Frankfurter Allgemeine Zeitung, August 8.
Bordo Michael D. & Finn E. Kydland (1999), “The Gold Standard as a Commitment Mechanism”, In: Michael D. Bordo, The Gold Standard and Related Regimes: Collected Essays. Cambridge: Cambridge University Press.
https://doi.org/10.1017/CBO9780511559624
Bordo, Michael D. & Harold James (2013), “The European Crisis in the Context of the History of Previous Financial Crises”, NBER Working Paper 19112. Cambridge MA: NBER.
Collignon, Stefan (2002), Monetary Stability in Europe. London: Routledge.
https://doi.org/10.4324/9780203165928
Cournède, Boris, Oliver Denk, Peter Hoeller (2015). “Finance and Inclusive Growth”, OECD Economic Policy Paper, June 2015 No. 14, Paris: OECD.
https://doi.org/10.1787/5js06pbhf28s-en
Davidson Paul (2002), Financial Markets, Money and the Real World. Cheltenham: Edward Elgar.
Draghi, Mario (2015), The ECB’s Recent Monetary Policy Measures: Effectiveness and Challenges; Camdessus Lecture by Mario Draghi, President of the ECB, IMF, Washington, DC, 14 May 2015.
Eichengreen, Barry (2015), Hall of Mirrors. Oxford: Oxford University Press.
Eichengreen, Barry & Peter Temin (2010), “Fetters of Gold and Paper.” Oxford Review of Economic Policy, 26(3): 370 - 384.
https://doi.org/10.1093/oxrep/grq018
Enderlein, Hendrik, et al. (2012), “Completing the Euro,” Notre Europe Studies & Reports 92. Paris: Notre Europe.
Fazi, Thomas & Guido Iodice (2016), Why further Integration is the Wrong Answer to the EMU’s Problems: The Case for a Decentralized Fiscal Stimulus.
Fisher, Irving (1933), ""The Debt-Deflation Theory of Great Depressions,"" Econometrica 1 (4): 337 – 57.
https://doi.org/10.2307/1907327
Flassbeck, Heiner & Costas Lapavitsas (2015), Against the Troika. London: Verso.
Fratscher, Marcel (2016), Mißbrauch der Globalisierung, Berlin: Deutsches Institut für Wirtschaftsforschung,
Funke, Manuel, Moritz Schularick & Christoph Trebesch (2015), “Going to Extremes: Politics after Financial Crisis, 1870-2014”, CESIFO Working Paper N0. 5553, Munich: Centre for Economic Studies & IFO Institute.
Habermas, Jürgen (2016), “Die Spieler treten ab.”, Die Zeit, July 6, 2016.
Hopkin, Jonathan (2015), “The Troubled Southern Periphery”, In: Matthias Mathijs & Mark Blyth, eds., (2015), The Future of the Euro. Oxford: Oxford University Press.
https://doi.org/10.1093/acprof:oso/9780190233235.003.0008
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https://doi.org/10.1111/jcms.12079
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https://doi.org/10.1111/jcms.12289
Juncker, Jean-Claude (2015), Completing Europe’s Economic and Monetary Union. Brussels: EU.
Kindleberger Charles (1986), The World in Depression. Berkeley: The University of California Press.
Legrain, Philippe (2014), How to Finish the Euro House. London: Centre for European Reform.
Matthijs, Matthias & Mark Blyth, eds., (2015), The Future of the Euro. Oxford: Oxford University Press
Maurer, Henri & Patrick Grussenmeyer (2015), “Financial Assistance Measures in the Euro Area from 2008 to 2013: Statistical Framework and Fiscal Impact”, ECB Statistics Paper 7 / April 2015. Frankfurt /Main: ECB.
Mazzucato, Mariana (2013), The Entrepreneurial State London: Anthem Press.
Mckinsey Global Institute (2015), Debt and (not much) Deleveraging. London: Mckinsey Global Institute.
Merler, Silvia (2015), “Squaring the Cycle: Financial Cycles, Capital Flows and Macroprudential Policy in the Euro Area”, Bruegel Working Paper 2015/14. Brussels: Bruegel.
Micossi, Stefano (2016), “Balance-of-Payments Adjustment in the Eurozone”, LUISS School of European Political Economy Policy Brief, January 21.
Montanaro, Elisabetta & Mario Tonveronachi (2012), “Financial re-regulation at a Crossroads: How the European Experience Strengthens the Case for a Radical Reform Built on Minsky’s Approach”, PSL Quarterly Review, 65(263): 335 – 383.
Notermans, Ton (2000), Money, Markets, and the State. Cambridge: Cambridge University Press.
https://doi.org/10.1017/CBO9780511521607
Notermans, Ton (2016), “Does Cohesion Policy Lead to Economic Convergence?”, in: Simona Piattoni & Laura Polverari, eds., Handbook of Cohesion Policy in the EU. Cheltenham, UK: Edward Elgar, pp. 461 – 474.
https://doi.org/10.4337/9781784715670.00046
O’Rourke, Kevin H. & Alan M. Taylor (2013), “Cross of Euros”, Journal of Economic Perspectives, 27(3): 167 - 192.
https://doi.org/10.1257/jep.27.3.167
OECD (2015), Economic Policy Reforms: Going for Growth. Paris: OECD.
Perotti, Enrico (2011), 'Systemic Liquidity Risk and Bankruptcy Exceptions', CEPR Policy Insight No. 52. London: CEPR.
Ruggie, John Gerard (1982), “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order”, International Organization 36(2): 379 – 415.
https://doi.org/10.1017/S0020818300018993
Temin, Peter (1989), Lessons from the Great Depression. Cambridge MA: The MIT Press.
Tepper, Jonathan (2012), A Primer on the Euro Breakup: Depart, Default and Devalue as the Optimal Solution. A Submission for the Wolfson Economics Prize 2012.
Turner, Adair (2014), “Something Old and Something New: Novel and Familiar Drivers of the Latest Crisis”, In: Piet Clement, Harold James & Herman Van der Wee, eds., Financial Innovation, Regulation and Crises in History, London: Pickering & Chatto.
van Rompuy, Herman (2012), Towards a Genuine Economic and Monetary Union. Brussels: EU.
Wyplosz, Charles (2010), “Financial Restraints and Liberalization in Postwar Europe”, In Gerard Caprio, Patrick Honohan & Joseph Stiglitz, eds., Financial Liberalization: How Far, How Fast? Cambridge: Cambridge University Press
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Published
2017-04-10
How to Cite
Notermans, T. (2017). Can Europe Prosper Without the Common Currency? A Historical Perspective. Journal of Reviews on Global Economics, 6, 129–142. https://doi.org/10.6000/1929-7092.2017.06.11
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