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Can Euroland Survive?

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  • Stephanie A. Kelton
  • L. Randall Wray

Abstract

Social unrest across Europe is growing as Euroland's economy collapses faster than the United States', the result of falling exports and a weaker fiscal response. The controversial title of this brief is based on a belief that the nature of the euro itself limits Euroland's fiscal policy space. The nations that have adopted the euro face "market-imposed" fiscal constraints on borrowing because they are not sovereign countries. Research Associate Stephanie A. Kelton and Senior Scholar L. Randall Wray foresee a real danger that these nations will be unable to prevent an accelerating slide toward depression that will threaten the existence of the European Union.

Suggested Citation

  • Stephanie A. Kelton & L. Randall Wray, 2009. "Can Euroland Survive?," Economics Public Policy Brief Archive ppb_106, Levy Economics Institute.
  • Handle: RePEc:lev:levppb:ppb_106
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    File URL: http://www.levyinstitute.org/pubs/ppb_106.pdf
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    References listed on IDEAS

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    1. Barry Eichengreen and Jurgen von Hagen., 1995. "Fiscal Policy and Monetary Union: Federalism, Fiscal Restrictions and the No-Bailout Rule," Center for International and Development Economics Research (CIDER) Working Papers C95-056, University of California at Berkeley.
    2. Mark M. Spiegel, 1997. "Fiscal constraints in the EMU," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug15.
    3. L. Randall Wray, 1998. "Modern Money," Macroeconomics 9810002, EconWPA.
    4. Philip Arestis & Mosahid Khan & Kul B. Luintel, 2002. "Fiscal Deficits in Monetary Unions: A Comparison of EMU and United States," Eastern Economic Journal, Eastern Economic Association, vol. 28(1), pages 89-103, Winter.
    5. C. Sardoni & L.R. Wray, 2006. "Monetary policy strategies of the European Central Bank and the Federal Reserve bank of the United States," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(3), pages 451-472.
    6. Bayoumi, Tamim & Goldstein, Morris & Woglom, Geoffrey, 1995. "Do Credit Markets Discipline Sovereign Borrowers? Evidence from US States," CEPR Discussion Papers 1088, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Andrea Terzi, 2010. "The "Keynesian Moment" in Policymaking, the Perils Ahead, and a Flow-of-funds Interpretation of Fiscal Policy," Economics Working Paper Archive wp_614, Levy Economics Institute.

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