Political Legitimacy in a Non-optimal Currency Area

On the basis of a brief reconstruction of the causes and impacts of the Euro crisis, this paper explores, counterfactually and hypothetically, whether the new Euro regime, insisting on fiscal austerity and supply-side reforms, could have prevented the rise of the crisis or is able to deal with its disastrous economic and socialimpact. A comparison with the likely impact of transfer-based Keynesian reflation suggests that, in both cases, economic success is uncertain, while both approaches are likely to produce severely negative sideeffects. In light of such dismal policy choices, attempts to politicize European election campaigns are morelikely to provoke unmanageable policy conflict than to overcome the input-oriented, democratic deficit ofEuropean economic governance