Lost at Sea: The Euro Needs a Euro Treasury
The euro crisis remains unresolved even as financial markets may seem calm for now. The current euro regime is inherently flawed, and recent reforms have failed to turn this dysfunctional regime into a viable one. Our investigation is informed by the "cartalist" critique of traditional "optimum currency area" theory (Goodhart 1998). Various proposals to rescue the euro are assessed and found lacking. A "Euro Treasury" scheme operating on a strict rule and specifically designed not to be a transfer union is proposed here as a condition sine qua non for healing the euroâ€™s potentially fatal birth defects. The Euro Treasury proposed here is the missing element that will mend the current fiscal regime, which is unworkable without it. The proposed scheme would end the currently unfolding euro calamity by switching policy from a public thrift campaign that can only impoverish Europe to a public investment campaign designed to secure Europeâ€™s future. No mutualization of existing national public debts is involved. Instead, the Euro Treasury is established as a means to pool eurozone public investment spending and have it funded by proper eurozone treasury securities.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Pisani-Ferry & Erkki VihriÃ¤lÃ¤ & Guntram B. Wolff, 2013. "Options for a Euro-area fiscal capacity," Policy Contributions 765, Bruegel.
- Philippe Aghion & Ioana Marinescu, 2008.
"Cyclical Budgetary Policy and Economic Growth: What Do We Learn from OECD Panel Data?,"
in: NBER Macroeconomics Annual 2007, Volume 22, pages 251-278
National Bureau of Economic Research, Inc.
- Aghion, Philippe & Marinescu, Ioana, 2007. "Cyclical Budgetary Policy and Economic Growth: What Do We Learn From OECD Panel Data?," Scholarly Articles 3350066, Harvard University Department of Economics.
- Gennaro Zezza, 2012. "The impact of fiscal austerity in the Eurozone," Review of Keynesian Economics, Edward Elgar, vol. 1(0), pages 37-54.
- Dirk Schoenmaker, 2013. "Post-Crisis Reversal in Banking and Insurance Integration: An Empirical Survey," European Economy - Economic Papers 496, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- George S. Tavlas, 2009. "Optimum-Currency-Area Paradoxes," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 536-551, 08.
- Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
- Thomas J. Sargent & Neil Wallace, 1981. "Some unpleasant monetarist arithmetic," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall.
- Giovanni Callegari & Giovanni Melina & Nicoletta Batini, 2012. "Successful Austerity in the United States, Europe and Japan," IMF Working Papers 12/190, International Monetary Fund.
- Olivier J. Blanchard & Daniel Leigh, 2013.
"Growth Forecast Errors and Fiscal Multipliers,"
American Economic Review,
American Economic Association, vol. 103(3), pages 117-20, May.
- Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," NBER Working Papers 18779, National Bureau of Economic Research, Inc.
- Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," IMF Working Papers 13/1, International Monetary Fund.
- Jorg Bibow, 2005. "Germany in crisis: the unification challenge, macroeconomic policy shocks and traditions, and EMU," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(1), pages 29-50.
- Ugo Panizza & Andrea Filippo Presbitero, 2012.
"Public Debt and Economic Growth: Is There a Causal Effect?,"
Mo.Fi.R. Working Papers
65, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Panizza, Ugo & Presbitero, Andrea F., 2014. "Public debt and economic growth: Is there a causal effect?," Journal of Macroeconomics, Elsevier, vol. 41(C), pages 21-41.
- Panizza, Ugo & Presbitero, Andrea F., 2012. "Public debt and economic growth: Is there a causal effect?," POLIS Working Papers 168, Institute of Public Policy and Public Choice - POLIS.
- Sebastian Dullien & Ferdinand Fichtner, 2013. "A Common Unemployment Insurance System for the Euro Area," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 3(1), pages 9-14.
- Nicolas Veron & Guntram B. Wolff, 2013.
"From Supervision to Resolution: Next Steps on the Road to European Banking Union,"
PB13-5, Peterson Institute for International Economics.
- Nicolas VÃ©ron & Guntram B. Wolff, 2013. "From supervision to resolution: next steps on the road to European banking union," Policy Contributions 771, Bruegel.
- Till van Treeck & Silke Tober & Achim Truger & Michael Brecht, 2010. "Squaring the circle in Euroland? Some remarks on the Stability and Convergence Programmes 2010-2013," IMK Working Paper 3-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Truger, Achim & Will, Henner, 2012. "The German 'debt brake': A shining example for European fiscal policy?," IPE Working Papers 15/2012, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
- Willi Koll, 2013. "Neue Wirtschaftsregierung und Tarifautonomie in der Europäischen Union, Makroökonomische Koordinierung im Dialog," IMK Studies 30-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Michael D. Bordo & Agnieszka Markiewicz & Lars Jonung, 2011.
"A Fiscal Union for the Euro: Some Lessons from History,"
NBER Working Papers
17380, National Bureau of Economic Research, Inc.
- Michael D. Bordo & Lars Jonung & Agnieszka Markiewicz, 2013. "A Fiscal Union for the Euro: Some Lessons from History ," CESifo Economic Studies, CESifo, vol. 59(3), pages 449-488, September.
- Francesco Paolo Mongelli, 2005. "What is European Economic and Monetary Union Telling us About the Properties of Optimum Currency Areas?," Journal of Common Market Studies, Wiley Blackwell, vol. 43(3), pages 607-635, 09.
- Jörg Bibow, 2004. "Reflections on the current fashion for central bank independence," Cambridge Journal of Economics, Oxford University Press, vol. 28(4), pages 549-576, July.
- George S. Tavlas, 1993. "The ‘New’ Theory of Optimum Currency Areas," The World Economy, Wiley Blackwell, vol. 16(6), pages 663-685, November.
- Stephanie Kelton, 2011. "Limitations of the Government Budget Constraint: Users vs. Issuers of the Currency," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 57-66, March.
- Hein, Eckhard & Truger, Achim, 2013. "Future fiscal and debt policies: Germany in the Context of the European Monetary Union," IPE Working Papers 24/2013, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
- Eckhard Hein & Achim Truger, 2006. "Fiscal Policy and Macroeconomic Performance in the Euro area - Lessons for the Future," IMK Working Paper 07-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Benedicta Marzinotto & AndrÃ© Sapir & Guntram B. Wolff, 2011.
"What kind of fiscal union?,"
- Marco Buti & Nicolas Carnot, 2012. "The EMU Debt Crisis: Early Lessons and Reforms," Journal of Common Market Studies, Wiley Blackwell, vol. 50(6), pages 899-911, November.
- Jorg Bibow, 2009. "On the origin and rise of central bank independence in West Germany," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 16(1), pages 155-190.
- Valila, Timo & Mehrotra, Aaron, 2005. "Evolution And Determinants Of Public Investment In Europe," Economic and Financial Reports 2005/1, European Investment Bank, Economics Department.
- J�rg Bibow, 2013. "At the crossroads: the euro and its central bank guardian (and saviour?)," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 609-626.
When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_780. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie-Celeste Edwards)
If references are entirely missing, you can add them using this form.