The Eurozone Debt Crisis: From its origins to a way forward
AbstractAs the Eurozone debt crisis reaches a turning point, this Policy Brief argues for a more organised intervention by the ECB to stop contagion through the creation of a quantitative easing programme, coupled with a political agreement among member states on a more federalist budget for the Eurozone. The roots of this crisis and how institutions have repeated some of the mistakes of the Argentine crisis, both in 1998 and 2010, are considered in this paper. The author analyses the reasons why the ECB should start a quantitative easing programme to contain government bond yields, and shows that it can be done with limited impact on inflation targeting policies. The importance of reinforcing the new policy announced by the ECB, which has lain rather dormant during the Eurozone crisis, is also highlighted as a pre-condition for a broader political agreement on more harmonised fiscal policies and to stabilise market conditions. Valiante finds that responses should be organised on three levels: institutional competences, monetary policy support, and fiscal policy coordination.
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Bibliographic InfoPaper provided by Centre for European Policy Studies in its series CEPS Papers with number 5985.
Length: 12 pages
Date of creation: Aug 2011
Date of revision:
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- Alcidi, Cinzia & Giovannini, Alessandro & Gros, Daniel, 2011. "History repeating itself: From the Argentine default to the Greek tragedy?," CEPS Papers 5836, Centre for European Policy Studies.
- Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-98, September.
- Barry Eichengreen, 2007.
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13393, National Bureau of Economic Research, Inc.
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- Carlo Panico & Francesco Purificato, 2012. "The Role of Institutional and Political Factors in the European Debt Crisis," Working Papers wp280, Political Economy Research Institute, University of Massachusetts at Amherst.
- Lannoo, Karel, 2011. "EU Federalism in Crisis," CEPS Papers 6498, Centre for European Policy Studies.
- Carlo Panico & Francesco Purificato, 2013. "The Debt Crisis and the European Central Bank’s Role of Lender of Last Resort," Working Papers wp306, Political Economy Research Institute, University of Massachusetts at Amherst.
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