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Political Economy of the Euro Area Crisis

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  • Casimir Dadak

    ()
    (Department of Business and Economics, Hollins University, USA)

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    Abstract

    For many experts the true motivation behind the introduction of a single currency in Europe is political rather than economic. This view is based on the fact that the euro area does not constitute an optimal currency area and, therefore, the costs of monetary integration are likely to outweigh the benefits. In particular, the loss of control over monetary policy and exchange rates make overcoming asymmetric demand-side shocks very painful. Moreover, the monetary union lacks a common fiscal authority that could help in smoothing out business cycles. The present crisis exposed these vulnerabilities and, unfortunately, so far economic policies adopted in the region have failed to rectify these shortcomings.

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    File URL: http://www.panoeconomicus.rs/casopis/2011_5/02%20Casimir%20Dadak.pdf
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    Bibliographic Info

    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 58 (2011)
    Issue (Month): 5 (December)
    Pages: 593-604

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    Handle: RePEc:voj:journl:v:58:y:2011:i:5:p:593-604

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    Web page: http://www.panoeconomicus.rs/

    Related research

    Keywords: European monetary union; Optimum currency area; Asymmetric shocks; Fiscal and monetary stabilization policies;

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    Cited by:
    1. Constantinos Alexiou & Joseph G. Nellis, 2013. "Challenging the Raison d’etre of Internal Devaluation in the Context of the Greek Economy," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(6), pages 813-836, December.
    2. Hansjörg Herr, 2014. "The European Central Bank and the US Federal Reserve as Lender of Last Resort," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(1), pages 59-78, Februar.

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