AbstractAfter the recent global financial crisis several countries on the eurozone’s south-western periphery, in particular Greece, Spain, Portugal and Ireland, have faced severe difficulties involving the risk of sovereign debt defaults and a new banking crisis. Other EU countries, above all France, were indirectly affected by this crisis, and some eastern European countries are also endangered. Although the EU has tried to contain the euro crisis with extensive rescue operations that have turned the no-bail out philosophy of the Maastricht Treaty on its head, in summer 2010 the danger was not yet over. Obviously, the construction of the eurozone, in particular the rules of conduct for the participating countries, needs to be reconsidered. Yet the euro should not be given up. The euro itself is indispensible for Europe. During the financial crisis it has protected its members from internal exchange rate shocks, it has reduced the European transactions costs for trade, and it is a necessary ingredient of further European integration. Nevertheless, Hans-Werner Sinn argues that the euro has not been as beneficial for all European countries as has often been claimed. The euro has shifted Europe’s growth forces from the center to the periphery. It has not been particularly beneficial for Germany, for example, and because of a lack of proper private and public debt constraints, it has stimulated the periphery of Europe up to the point of overheating, with ultimately dangerous consequences for European cohesion. The current crisis has not put an end to this development. It has flipped a toggle switch that will shift the forces of growth back from the periphery to the center, although the EU rescue measures counteract this. Hans-Werner Sinn criticizes these measures because of the moral hazard effects they generate and proposes a new political design for a more prosperous and stable development of the eurozone.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Ifo Institute for Economic Research at the University of Munich in its journal CESifo Forum.
Volume (Year): 11 (2010)
Issue (Month): SPECIALISSUEAUGUST2010 (08)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Claudia M. Buch, 2012. "From the Stability Pact to ESM - What next?," IAW Discussion Papers 85, Institut für Angewandte Wirtschaftsforschung (IAW).
- Lars Calmfors & Giancarlo Corsetti & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi & Xavier Vives, 2012. "Chapter 2: The European Balance-of-Payments Problem," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 57-82, 02.
- Otmar, Issing, 2011. "The crisis of European Monetary Union â Lessons to be drawn," Journal of Policy Modeling, Elsevier, vol. 33(5), pages 737-749, September.
- Oliver Landmann, 2011. "On the Macroeconomics of European Divergence," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(2), pages 19-25, 07.
- Hans-Werner Sinn, 2013. "Die Target-Verluste im Fall des Auseinanderbrechens des Euro – Eine Replik auf De Grauwe und Ji," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(01), pages 14-24, 01.
- Martin Hellwig, 2011. "Quo vadis, Euroland? European Monetary Union between Crisis and Reform," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2011_12, Max Planck Institute for Research on Collective Goods.
- Luigi Bonatti & Andrea Fracasso, 2012. "A Germans’ dilemma: save the euro or preserve their socio-economic model," Department of Economics Working Papers 1207, Department of Economics, University of Trento, Italia.
- Martin Schütte, 2010. "Kriterien für eine Staatsinsolvenz," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 63(23), pages 16-19, December.
- Fabian Lindner, 2012. "Saving does not finance Investment: Accounting as an indispensableguide to economic theory," IMK Working Paper 100-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Gunther Schnabl & Stephan Freitag, 2012. "Reverse Causality in Global and Intra-European Imbalances," Review of International Economics, Wiley Blackwell, vol. 20(4), pages 674-690, 09.
- Gunther Schnabl & Stephan Freitag, 2012. "Determinants of Global and Intra-European Imbalances," Global Financial Markets Working Paper Series 25-2011, Friedrich-Schiller-University Jena.
- Sell, Friedrich L. & Sauer, Beate, 2011. "A further view on current account, capital account and Target2 balances: Assessing the effect on capital structure and economic welfare," Working Papers in Economics 2011,2, Universität der Bundeswehr München, Economic Research Group.
- Werding, Martin, 2011. "Demographie und öffentliche Haushalte: Simulationen zur langfristigen Tragfähigkeit der gesamtstaatlichen Finanzpolitik in Deutschland," Working Papers 03/2011, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
- Hans-Werner Sinn & Teresa Buchen & Timo Wollmershäuser, 2011. "Trade Imbalances – Causes, Consequences and Policy Measures: Ifo’s Statement for the Camdessus Commission," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(1), pages 47-58, 03.
- Friedrich L. Sell & Beate Sauer, 2011. "Geld-, Kapitalmärkte und Wohlfahrt: Eine Wirkungsanalyse der Target2-Salden," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(16), pages 51-57, 09.
- Bruno Dallago & Chiara Guglielmetti, 2011. "The Eurozone Crisis: Institutional Setting, Structural Vulnerability, and Policies," Openloc Working Papers 1112, Public policies and local development.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.