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The past and future of the euro

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  • Philip Arestis

    (University of Cambridge)

Abstract

This contribution discusses the experience of the euro, and the extent to which its future is promising. The discussion begins with the Economic and Monetary Union (EMU) theoretical framework and policies, and adopted by the European Central Bank (ECB), and the extent to which fiscal policy, pursued by the EMU member countries, and monetary policy, pursued by the ECB, have been successful. The theoretical background of this approach is based on the New Consensus Macroeconomics (NCM), but it differs; and this is elaborated upon and discussed extensively. This discussion inevitably includes the post Global Financial Crisis (GFC), the Great Recession (GR) and the euro-crisis period in an attempt to examine the consistency of the theoretical background and the fiscal and monetary policies pursued. In terms of the future of the euro, the discussion just suggested enables this contribution to conclude that the extent to which the euro would survive requires further economic policies. Such policies, in addition to the current monetary policy, should be especially proper EMU fiscal policy, and other policies as discussed in this contribution. In effect this amounts to the suggestion that political integration is what is required to enable the euro to survive in the future.

Suggested Citation

  • Philip Arestis, 2019. "The past and future of the euro," Revista de Economia Critica, Universidad Pablo de Olavide y Asociacion de Economia Critica, vol. 27, pages 6-15.
    • Handle: RePEc:ret:ecocri:rec27_02
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    References listed on IDEAS

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    1. Stephen G Cecchetti & Martin Feldstein & Jaime Caruana & José de Gregorio & Peter Diamond & Peter Praet, 2011. "Fiscal policy and its implications for monetary and financial stability," BIS Papers, Bank for International Settlements, number 59, February.
    2. Philip Arestis, 2012. "Fiscal policy: a strong macroeconomic role," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(0), pages 93-108.
    3. Peter Kriesler & G. C. Harcourt & Joseph Halevi, 2018. "Central Bank Independence Revisited," Discussion Papers 2018-01, School of Economics, The University of New South Wales.
    4. Alvaro Angeriz & Philip Arestis, 2008. "Assessing inflation targeting through intervention analysis," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 293-317, April.
    5. James Forder, 2004. "The theory of credibility: confusions, limitations and dangers," Chapters, in: Philip Arestis & Malcolm Sawyer (ed.), Neo-Liberal Economic Policy, chapter 2, Edward Elgar Publishing.
    6. Alvaro Angeriz & Philip Arestis, 2007. "Monetary policy in the UK," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(6), pages 863-884, November.
    7. Athanasios Orphanides, 2020. "The fiscal–monetary policy mix in the euro area: challenges at the zero lower bound," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(103), pages 461-517.
    8. International Monetary Fund, 2015. "Euro Area Policies: Selected Issues," IMF Staff Country Reports 2015/205, International Monetary Fund.
    9. Philip Arestis, 2015. "Coordination of fiscal with monetary and financial stability policies can better cure unemployment," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(1), pages 233-247, April.
    10. Corsetti, Giancarlo & Dedola, Luca & Jarociński, Marek & Maćkowiak, Bartosz & Schmidt, Sebastian, 2019. "Macroeconomic stabilization, monetary-fiscal interactions, and Europe's monetary union," European Journal of Political Economy, Elsevier, vol. 57(C), pages 22-33.
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