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dc.contributor.authorDe Grauwe, Paulen_US
dc.date.accessioned2011-06-08en_US
dc.date.accessioned2011-06-29T11:15:02Z-
dc.date.available2011-06-29T11:15:02Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/46299-
dc.description.abstractWhen entering a monetary union, member-countries change the nature of their sovereign debt in a fundamental way, i.e. they cease to have control over the currency in which their debt is issued. As a result, financial markets can force these countries' sovereigns into default. In this sense member countries of a monetary union are downgraded to the status of emerging economies. This makes the monetary union fragile and vulnerable to changing market sentiments. It also makes it possible that self-fulfilling multiple equilibria arise. I analyze the implications of this fragility for the governance of the Eurozone. I conclude that the new governance structure (ESM) does not sufficiently recognize this fragility. Some of the features of the new financial assistance are likely to increase this fragility. In addition, it is also likely to rip member-countries of their ability to use the automatic stabilizers during a recession. This is surely a step backward in the long history of social progress in Europe. I suggest a different approach to deal with these problems.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo working paper: Monetary Policy and International Finance 3456en_US
dc.subject.jelE00en_US
dc.subject.ddc330en_US
dc.subject.keywordEurozoneen_US
dc.subject.keywordmultiple equilibriaen_US
dc.subject.keywordgovernanceen_US
dc.subject.stwEuropäische Wirtschafts- und Währungsunionen_US
dc.subject.stwGovernance-Ansatzen_US
dc.subject.stwGleichgewichten_US
dc.subject.stwÖffentliche Schuldenen_US
dc.subject.stwStaatsbankrotten_US
dc.subject.stwFinanzmarktkriseen_US
dc.subject.stwEurozoneen_US
dc.titleA fragile Eurozone in search of a better governanceen_US
dc.typeWorking Paperen_US
dc.identifier.ppn661650278en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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