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What Does the 1930s’ Experience Tell Us about the Future of the Eurozone?

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  • Crafts, Nicholas

    (University of Warwick)

Abstract

If the Eurozone follows the precedent of the 1930s, it will not survive. The attractions of escaping from the gold standard then were massive and they point to a strategy of devalue and default for today’s crisis countries. A fully-federal Europe with a banking union and a fiscal union is the best solution to this problem but is politically infeasible. However, it may be possible to underpin the Euro by a ‘Bretton-Woods compromise’ that accepts a retreat from some aspects of deep economic integration since exit entails new risks of financial crisis that were not present eighty years ago.

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  • Crafts, Nicholas, 2013. "What Does the 1930s’ Experience Tell Us about the Future of the Eurozone?," CAGE Online Working Paper Series 142, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:142
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    Cited by:

    1. John Phelan, 2015. "The Road Not Taken: A Comparison Between the Hard ECU and the Euro," Economic Affairs, Wiley Blackwell, vol. 35(3), pages 397-415, October.
    2. Harris Dellas & George S. Tavlas, 2017. "Milton Friedman and the case for flexible exchange rates and monetary rules," Working Papers 236, Bank of Greece.
    3. van Riet, Ad, 2015. "Market-preserving fiscal federalism in the European Monetary Union," MPRA Paper 77772, University Library of Munich, Germany.
    4. van Riet, Ad, 2016. "Safeguarding the euro as a currency beyond the state," Occasional Paper Series 173, European Central Bank.
    5. Miguel Otero-Iglesias, 2015. "Stateless Euro: The Euro Crisis and the Revenge of the Chartalist Theory of Money," Journal of Common Market Studies, Wiley Blackwell, vol. 53(2), pages 349-364, March.

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    Keywords

    economic disintegration; Eurozone; financial repression; gold standard; macroeconomic trilemma; political trilemma;

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