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The Eurozone: Similitudes and differences with Keynes's Plan

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  • Marc Lavoie

Abstract

The eurozone is often considered to be the brainchild of Robert Mundell, who has often bragged about his paternity. In reality, the Eurozone setup, most specifically the TARGET2 settlement system, has several characteristics that look alike the plan for an international currency union that Keynes proposed in the early 1940s. The main objective of the paper is to show the similitudes and the differences between the Eurozone currency union and Keynes' Plan. The paper will also discuss some of the confusions that have arisen from the analysis of the TARGET2 system and the decision of the German constitutional court; and it will deal with the question of whether or not the European financial crisis of the GIIPS countries was akin to a balance-of-payments crisis as argued by some authors and denied by others.

Suggested Citation

  • Marc Lavoie, 2015. "The Eurozone: Similitudes and differences with Keynes's Plan," IMK Working Paper 145-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  • Handle: RePEc:imk:wpaper:145-2015
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    References listed on IDEAS

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    1. Malcolm Sawyer, 2001. "Minsky's analysis, the European single currency and the global financial system," Chapters,in: Financial Keynesianism and Market Instability, chapter 10 Edward Elgar Publishing.
    2. Howard R. Vane & Chris Mulhearn, 2006. "Interview with Robert A. Mundell," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 89-110, Fall.
    3. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
    4. Alain Parguez, 1999. "The Expected Failure of the European Economic and Monetary Union: A False Money against the Real Economy," Eastern Economic Journal, Eastern Economic Association, vol. 25(1), pages 63-76, Winter.
    5. Wynne Godley & Marc Lavoie, 2007. "A simple model of three economies with two currencies: the eurozone and the USA," Cambridge Journal of Economics, Oxford University Press, vol. 31(1), pages 1-23, January.
    6. T.I. Palley, 1997. "European Monetary Union: an old Keynesian guide to issues," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 50(201), pages 147-164.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Lo spread a zero per rendere l’euro irrevocabile
      by keynesblog in Keynes Blog on 2017-12-04 21:27:55

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    Cited by:

    1. Alberto Botta & Daniele Tori, 2015. "A critique to the expansionary austerity: Theoretical weaknesses and empirical counter evidence," Working Papers PKWP1511, Post Keynesian Economics Society (PKES).
    2. João Veríssimo LISBOA & Mário Gomes AUGUSTO & Juan PIÑEIRO-CHOUSA, 2015. "A Combined Approach To Access Short Term Changes In Economic Activity Of Portugal And Spain," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 24(2), pages 99-110.

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