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Breaking Up is Hard to Do

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  • Graham Bird

Abstract

From a position some years ago where the euro was seen as set to challenge the dollar as the world’s leading currency, there are now serious concerns that the ongoing Eurozone crisis will lead to some countries eventually withdrawing from it, beginning a process of European monetary disintegration. In retrospect, insufficient attention was paid to the economics of optimum currency area theory when the Eurozone was set up, and too much to the apparent political imperatives of European unity. Reversing the process of European monetary integration is not straightforward. There are significant uncertainties, but there are also serious doubts as to whether the reforms needed to sustain the Eurozone in its current form will be introduced. The withdrawal of some of the weaker economies does not signal the end of the euro. By analogy, while some marriages are based on close compatibility, and are successful and long lasting, others encounter irreconcilable differences. In these cases divorce, although unpleasant and stressful, may be the preferred outcome.

Suggested Citation

  • Graham Bird, 2012. "Breaking Up is Hard to Do," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 13(3), pages 171-182, July.
  • Handle: RePEc:wej:wldecn:533
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=533
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    Cited by:

    1. Graham Bird & Wenti Du & Eric Pentecost & Thomas Willett, 2017. "Was it different the second time? An empirical analysis of contagion during the crises in Greece 2009–15," The World Economy, Wiley Blackwell, vol. 40(12), pages 2530-2542, December.
    2. Marco Meyer, 2021. "Dealing fairly with trade imbalances in monetary unions," Politics, Philosophy & Economics, , vol. 20(1), pages 45-66, February.
    3. Graham Bird & Wenti Du & Thomas Willett, 2017. "Behavioral Finance and Efficient Markets: What does the Euro Crisis Tell us?," Open Economies Review, Springer, vol. 28(2), pages 273-295, April.
    4. William Q. Judge & Yuping Liu–Thompkins & J. Lee Brown & Chatdanai Pongpatipat, 2015. "The Impact of Home Country Institutions on Corporate Technological Entrepreneurship via R&D Investments and Virtual World Presence," Entrepreneurship Theory and Practice, , vol. 39(2), pages 237-266, March.

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