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The Strange Case of the Attack on the Euro Area: Who Is To Blame?


  • Afonso, Óscar
  • Henrique Alves, Rui


In recent months, the euro area has been under fire from the financial markets, speculators being blamed for the mounting of a kind of conspiracy whose ultimate goal would be the disintegration of the project's Economic and Monetary Union (EMU). In this paper, we discuss the true reasons of this situation with reference to four issues which the debate remains open since the early 90s: nominal convergence versus real convergence; need –or not– for the coordination of fiscal policies; adjustment mechanisms to specific shocks and the theory of optimum currency areas; and need –or not– for further progress in political integration. Using data on the Portuguese case, we argue that, on several of these topics, the present framework of the EMU still reveals many weaknesses, which would underpin the current unstable situation. In this context, we present some suggestions for strengthening the euro area, particularly in terms of its economic governance.

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  • Afonso, Óscar & Henrique Alves, Rui, 2012. "The Strange Case of the Attack on the Euro Area: Who Is To Blame?," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 21(ex).
  • Handle: RePEc:sdo:regaec:v:21:y:2012:i:ex_5

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    References listed on IDEAS

    1. Verónica Amarante & Ivone Perazzo, 2009. "Crecimiento económico y pobreza en Uruguay, 1991-2006," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, December.
    2. Cornia, Giovanni Andrea, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," WIDER Working Paper Series 009, World Institute for Development Economic Research (UNU-WIDER).
    3. Verónica Amarante & Andrés Dean & Rodrigo Arím, 2013. "Unemployment Insurance Design and Its Effects: Evidence for Uruguay," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, June.
    4. Bruno Martorano, 2014. "The Impact of Uruguay's 2007 Tax Reform on Equity and Efficiency," Development Policy Review, Overseas Development Institute, vol. 32(6), pages 701-714, November.
    5. Arim, Rodrigo & Cruces, Guillermo Antonio & Vigorito, Andrea, 2009. "Programas sociales y transferencias de ingresos en Uruguay: los beneficios no contributivos y las alternativas para su extensión," Políticas Sociales 146, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Amarante, Veronica & Vigorito, Andrea, 2011. "Uruguayâ..s Income Inequality and Political Regimes during 1981â..2010," WIDER Working Paper Series 094, World Institute for Development Economic Research (UNU-WIDER).
    7. Bucheli, Marisa & Furtado, Magdalena, 2005. "Uruguay 1998-2002: la distribución del ingreso en la crisis," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    8. repec:unu:wpaper:wp2012-09 is not listed on IDEAS
    9. David De Ferranti & Guillermo E. Perry & Francisco H.G. Ferreira & Michael Walton, 2004. "Inequality in Latin America : Breaking with History?," World Bank Publications, The World Bank, number 15009.
    10. Jorge Notaro, 2005. "Employment and unemployment in Uruguay 1984-2005," Documentos de Trabajo (working papers) 05-02, Instituto de Economía - IECON.
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