Euro Zone Crisis. From "Optimum" To Collapse

The European leaders adopted a series of measures so that the Euro zone could come out of the crisis. This study demonstrates that the fiscal Treaty, as the other solutions proposed by the European leaders, represents necessary conditions, which are far from being sufficient to surpass the crisis from the actual monetary union. On the background of the critical structural problems, the lack of competitiveness has constituted the main factor leading to a severe aggravation of the public finances. Consequently, the problem of the public finances represents the effect and not the cause of the actual crisis. Moreover, from a technical point of view, the latest economic studies have demonstrated that not even the structural budget balance indicator is enough to correctly assess a country's fiscal position (its limiting to 0.5% being proposed in the fiscal treaty). It has been shown that the structural budget balance indicator should be improved, in order to also take into consideration the deviation of the current account balance from its sustainable level, particularly during the stage of the economic cycle characterized by high absorption. This study has empirically demonstrated this in the case of the Romanian economy.