IDEAS home Printed from https://ideas.repec.org/a/eee/joecas/v28y2023ics1703494923000324.html
   My bibliography  Save this article

Asymmetries in post-war monetary arrangements in Europe: From Bretton Woods to the Euro Area

Author

Listed:
  • Alogoskoufis, George
  • Gravas, Konstantinos
  • Jacque, Laurent

Abstract

This paper provides a perspective on monetary cooperation in Europe, before and after the creation of the euro area (EA), focusing on macroeconomic and financial asymmetries among its member states. After surveying the evolution of EU macroeconomic and monetary arrangements and developments before and after the creation of the euro, and particularly the euro area crisis, we argue that economic and financial asymmetries have played a key role in post-war monetary arrangements in Europe. Such asymmetries have also characterized the euro area, which needs fundamental fiscal, financial and labor market reforms in order to operate more efficiently as an optimum currency area. Two key reforms would be a common EA budget of sufficient size, which would help smooth out the asymmetric impact of macroeconomic shocks through the operation of automatic fiscal stabilizers and the explicit recognition of the ECB as a lender of last resort in times of crisis.

Suggested Citation

  • Alogoskoufis, George & Gravas, Konstantinos & Jacque, Laurent, 2023. "Asymmetries in post-war monetary arrangements in Europe: From Bretton Woods to the Euro Area," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).
    • Handle: RePEc:eee:joecas:v:28:y:2023:i:c:s1703494923000324
    DOI: 10.1016/j.jeca.2023.e00320
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1703494923000324
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeca.2023.e00320?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    2. Olivier Bargain & Mathias Dolls & Clemens Fuest & Dirk Neumann & Andreas Peichl & Nico Pestel & Sebastian Siegloch, 2013. "Fiscal union in Europe? Redistributive and stabilizing effects of a European tax-benefit system and fiscal equalization mechanism [A strong employment agenda – the pathway to economic recovery]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(75), pages 375-422.
    3. Eichengreen, Barry, 2012. "Exorbitant Privilege: The Rise and Fall of the Dollar," OUP Catalogue, Oxford University Press, number 9780199642472, Decembrie.
    4. repec:spo:wpmain:info:hdl:2441/4qcei72ijt9qco0d0fp1ak47b7 is not listed on IDEAS
    5. Markus K. Brunnermeier & Harold James & Jean-Pierre Landau, 2016. "The Euro and the Battle of Ideas," Economics Books, Princeton University Press, edition 1, number 10828.
    6. Julia Darby & Jacques Melitz, 2008. "Social spending and automatic stabilizers in the OECD [‘Real-time output gaps in ex post policy analysis: A red herring?’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(56), pages 716-756.
    7. repec:oup:ecpoli:v:28:y:2013:i:75:p:375-422 is not listed on IDEAS
    8. Barry Eichengreen & Peter Temin, 2010. "Fetters of gold and paper," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 370-384, Autumn.
    9. repec:hal:spmain:info:hdl:2441/4qcei72ijt9qco0d0fp1ak47b7 is not listed on IDEAS
    10. De Grauwe, Paul & Ji, Yuemei, 2022. "The fragility of the Eurozone: Has it disappeared?," Journal of International Money and Finance, Elsevier, vol. 120(C).
    11. De Grauwe Paul & Ji Yuemei, 2018. "Core-Periphery Relations in the Eurozone," The Economists' Voice, De Gruyter, vol. 15(1), pages 1-15, December.
    12. Barry Eichengreen, 2010. "Global Imbalances and the Lessons of Bretton Woods," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262514141, December.
    13. Michael D. Bordo, 2016. "The Operation and Demise of the Bretton Woods System; 1958 to 1971," Economics Working Papers 16116, Hoover Institution, Stanford University.
    14. Otmar Issing, 2005. "Why did the Great Inflation not happen in Germany?," Review, Federal Reserve Bank of St. Louis, vol. 87(Mar), pages 329-336.
    15. Giovanni Callegari & Francesco Drudi & Keith Kuester, 2017. "The fiscal mix in the euro-area crisis: dimensions and a model-based assessment of effects," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 32(89), pages 127-169.
    16. Charles Wyplosz, 2016. "The six flaws of the Eurozone," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(87), pages 559-606.
    17. Orphanides, Athanasios, 2017. "Central Bank Policies and the Debt Trap," CEPR Discussion Papers 11834, C.E.P.R. Discussion Papers.
    18. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
    19. repec:bla:ecpoli:v:28:y:2013:i:75:p:375-422 is not listed on IDEAS
    20. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830.
    21. Joong Shik Kang & Jay C. Shambaugh, 2016. "The rise and fall of European current account deficits," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(85), pages 153-199.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meng QIN, 2024. "The essential role of U.S.-China tensions: a fresh insight into the gold market," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(641), W), pages 227-246, Winter.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. George Alogoskoufis, 2019. "Greece and the Euro: A Mundellian Tragedy," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 136, Hellenic Observatory, LSE.
    2. Hachula, Michael & Piffer, Michele & Rieth, Malte, 2020. "Unconventional Monetary Policy, Fiscal Side Effects and Euro Area (Im)balances," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 18(1), pages 202-231.
    3. Philip R. Lane, 2019. "Macrofinancial Stability and the Euro," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 424-442, September.
    4. Roberto Veneziani & Luca Zamparelli & Michalis Nikiforos & Gennaro Zezza, 2017. "Stock-Flow Consistent Macroeconomic Models: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1204-1239, December.
    5. Boyer, Pierre & Blesse, Sebastian & Bordignon, Massimo & Carapella, Piergiorgio & Heinemann, Friedrich & Janeba, Eckhard & Raj, Anasuya, 2020. "The future of the European project: survey results from members of national parliaments in France, Italy and Germany," CEPR Discussion Papers 15021, C.E.P.R. Discussion Papers.
    6. Jesus Fernandez-Villaverde & Tano Santos, 2017. "Institutions and Political Party Systems: The Euro Case," PIER Working Paper Archive 17-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Jul 2017.
    7. Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Automatic stabilizers and economic crisis: US vs. Europe," Journal of Public Economics, Elsevier, vol. 96(3), pages 279-294.
    8. Pierre L. Siklos, 2020. "Looking into the Rear-View Mirror: Lessons from Japan for the Eurozone and the U.S?," IMES Discussion Paper Series 20-E-02, Institute for Monetary and Economic Studies, Bank of Japan.
    9. George Alogoskoufis, 2024. "Before and After the Political Transition of 1974 Institutions, Politics, and the Economy of Post-War Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 198, Hellenic Observatory, LSE.
    10. Herrmann, Sabine & Winkler, Adalbert, 2009. "Real convergence, financial markets, and the current account - Emerging Europe versus emerging Asia," The North American Journal of Economics and Finance, Elsevier, vol. 20(2), pages 100-123, August.
    11. Linda Glawe & Helmut Wagner, 2021. "Divergence Tendencies in the European Integration Process: A Danger for the Sustainability of the E(M)U?," JRFM, MDPI, vol. 14(3), pages 1-22, March.
    12. Alogoskoufis, George, 2024. "Before and after the political transition of 1974: institutions, politics, and the economy of post-war Greece," LSE Research Online Documents on Economics 124056, London School of Economics and Political Science, LSE Library.
    13. Balli, Faruk & Sorensen, Bent E., 2007. "Risk Sharing among OECD and EU Countries: The Role of Capital Gains, Capital Income, Transfers, and Saving," MPRA Paper 10223, University Library of Munich, Germany.
    14. Helge Berger & Giovanni Dell’Ariccia & Maurice Obstfeld, 2019. "Revisiting the Economic Case for Fiscal Union in the Euro Area," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 657-683, September.
    15. Verstegen, Loes & Meijdam, Lex, 2016. "The Effectiveness of a Fiscal Transfer Mechanism in a Monetary Union : A DSGE Model for the Euro Area," Discussion Paper 2016-023, Tilburg University, Center for Economic Research.
    16. Bordo, Michael & James, Harold, 2014. "The European Crisis in the Context of the History of Previous Financial Crises," Journal of Macroeconomics, Elsevier, vol. 39(PB), pages 275-284.
    17. Deborah Mabbett & Waltraud Schelkle, 2015. "What difference does Euro membership make to stabilization? The political economy of international monetary systems revisited," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 508-534, June.
    18. Carlo Klein, 2021. "The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 7(1), pages 41-66, January.
    19. Jan Priewe, 2020. "Europäische Wirtschafts- und Währungsunion: Grenzwerte für Defizite und Schulden in der Kritik [A Critique of the Caps on Deficits and Debt in the European Monetary Union]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(7), pages 538-544, July.
    20. Markus Reischmann, 2016. "Empirical Studies on Public Debt and Fiscal Transfers," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 63, May.

    More about this item

    Keywords

    Euro area; Monetary policy; Fiscal policy; Current account; Asymmetries; Reforms;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F3 - International Economics - - International Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joecas:v:28:y:2023:i:c:s1703494923000324. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/the-journal-of-economic-asymmetries/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.