The Eurozone´s architecture and the crisis of its periphery

This research analyses the underlying causes of the Eurozone periphery’s economic crisis and suggests an economic policy package not only to restore short-term economic growth, but also to make it sustainable in the long term. Policy recommendations to stren¬gthen economic growth and speed up structural reforms are based on an in-depth examina¬tion of the vulnerabilities created by the Eurozone’s institutional design and aggravated by the recent US financial crisis. As shall be shown, the inconsistency between the Eurozone’s architecture and the economic features of some participating nations was responsible for the noticeable fiscal imbalances and international competitiveness differentials within the region. The difficulties to bring down the public debt value and to improve the fiscal per¬formance in the Eurozone periphery, in addition to the undergoing deflationary process, have also resulted from the introduction of the common currency and the macroeconomic policy changes brought about by it. In this perspective, important changes are suggested to the Eurozone’s institutional framework in order to positively affect international competi¬tiveness, government finances and the health of financial institutions.