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Political Economy of the Euro Area Crisis

  • Casimir Dadak

    ()

    (Department of Business and Economics, Hollins University, USA)

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    For many experts the true motivation behind the introduction of a single currency in Europe is political rather than economic. This view is based on the fact that the euro area does not constitute an optimal currency area and, therefore, the costs of monetary integration are likely to outweigh the benefits. In particular, the loss of control over monetary policy and exchange rates make overcoming asymmetric demand-side shocks very painful. Moreover, the monetary union lacks a common fiscal authority that could help in smoothing out business cycles. The present crisis exposed these vulnerabilities and, unfortunately, so far economic policies adopted in the region have failed to rectify these shortcomings.

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    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 58 (2011)
    Issue (Month): 5 (December)
    Pages: 593-604

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    Handle: RePEc:voj:journl:v:58:y:2011:i:5:p:593-604
    Contact details of provider: Web page: http://www.panoeconomicus.rs/

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