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The Nature of the Eurocrisis. A Reply to Febrero, Uxò and Bermejo

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  • Sergio Cesaratto

    (University of Siena)

Abstract

Febrero et al. (2017) criticise the balance of payments (BOP) view of the EMU crisis. I have no major objections to most of the single aspects of the crisis pointed out by these authors, except that they appear to underline specific sides of the EMU crisis, while missing a unifying and realistic explanation. Specific semi-automatic mechanisms differentiate a BOP crisis in a currency union from a traditional one. Unfortunately, these mechanisms give Febrero et al. the illusion that a BOP crisis in a currency union is impossible. My conclusion is that an interpretation of the Eurozone troubles as a balance of payments (BOP) crisis provides a more consistent framework. The debate has some relevance for the policy prescriptions to solve the eurocrisis. Given the costs that all sides would incur if the currency union were to break up, austerity policies are still seen by European politicians as a tolerable price to pay to keep foreign imbalances at bay - with the sweetener of some ECB support, for as long as Berlin allows the ECB to provide it.

Suggested Citation

  • Sergio Cesaratto, 2017. "The Nature of the Eurocrisis. A Reply to Febrero, Uxò and Bermejo," a/ Working Papers Series 1703, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    • Handle: RePEc:ais:wpaper:1703
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    References listed on IDEAS

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    Cited by:

    1. Sergio Cesaratto, 2017. "Bofinger and Ries versus Borio and Disyatat: macroeconomics after endogenous money. A brief note," Department of Economics University of Siena 763, Department of Economics, University of Siena.
    2. Sergio Cesaratto & Stefano di Bucchianico, 2020. "Endogenous money and the theory of long-period effective demand," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(1), pages 1-38, June.

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    More about this item

    Keywords

    European economic and monetary union; ECB; balance of payment crisis; Target2; Euro.;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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