The Breakup of the Euro Area
The possibility that the euro area might break up was being raised even before the single currency existed. These scenarios were then lent new life five or six years on, when appreciation of the euro and problems of slow growth in various member states led politicians to blame the European Central Bank for disappointing economic performance. Highly-placed European officials reportedly discussed the possibility that one or more participants might withdraw from the monetary union. How seriously should we take these scenarios? And how significant would be the economic and political consequences? It is unlikely, I argue here, that one or more members of the euro area will leave in the next ten years; total disintegration of the euro area is even more unlikely. While other authors have minimized the technical difficulties of reintroducing a national currency, I suggest that those technical difficulties would be quite formidable. Nor is it certain that the economic problems of the participating member states would be significantly ameliorated by abandoning the euro. And even if there are immediate economic benefits, there would be longer-term political costs.
|Date of creation:||Sep 2007|
|Date of revision:|
|Publication status:||published as The Breakup of the Euro Area , Barry Eichengreen. in Europe and the Euro , Alesina and Giavazzi. 2010|
|Note:||DAE IFM POL|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- Ian Lienert, 2005. "Who Controls the Budget; The Legislature or the Executive?," IMF Working Papers 05/115, International Monetary Fund.
- Paul De Grauwe, 2006. "On monetary and political union," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(4), pages 3-10, December.
- Wacziarg, Romain & Alesina, Alberto, 1998.
"Openness, Country Size and Government,"
4553014, Harvard University Department of Economics.
- Inman, Robert P. & Rubinfeld, Daniel L., 1992. "Fiscal federalism in Europe : Lessons from the United States experience," European Economic Review, Elsevier, vol. 36(2-3), pages 654-660, April.
- Eduardo Levy Yeyati, 2005.
"Financial Dollarisation: Evaluating The Consequences,"
Business School Working Papers
findollarisation, Universidad Torcuato Di Tella.
- Eduardo Levy Yeyati, 2006. "Financial dollarization: evaluating the consequences," Economic Policy, CEPR;CES;MSH, vol. 21(45), pages 61-118, 01.
- Eduardo Levy-Yeyati, 2004. "FINANCIAL DOLLARIZATION: Evaluating the consequences," Econometric Society 2004 Latin American Meetings 184, Econometric Society.
- Hallerberg, Mark & Wolff, Guntram B., 2006. "Fiscal institutions, fiscal policy and sovereign risk premia," Discussion Paper Series 1: Economic Studies 2006,35, Deutsche Bundesbank, Research Centre.
- C. Monica Capra & Charles A. Holt, 1999. "Coordination," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 630-636, January.
- Cooper,Russell, 1999. "Coordination Games," Cambridge Books, Cambridge University Press, number 9780521570176, june. pag.
- Herschel I. Grossman & John B. Van Huyck, 1985.
"Sovereign Debt as a Contingent Claim: Excusable Default, Repudiation, and Reputation,"
NBER Working Papers
1673, National Bureau of Economic Research, Inc.
- Grossman, Herschel I & Van Huyck, John B, 1988. "Sovereign Debt as a Contingent Claim: Excusable Default, Repudiation, and Reputation," American Economic Review, American Economic Association, vol. 78(5), pages 1088-97, December.
- Fidrmuc, J. & Horváth, J., 1998.
"Stability of Monetary Unions : Lessons from the Break-Up of Czechoslovakia,"
1998-74, Tilburg University, Center for Economic Research.
- Fidrmuc, Jan & Horvath, Julius & Fidrmuc, Jarko, 1999. "Stability of Monetary Unions: Lessons from the Break-up of Czechoslovakia," Transition Economics Series 10, Institute for Advanced Studies.
- Fidrmuc, Jan & Horvath, Julius & Fidrmuc, Jarko, 1999. "Stability of monetary unions: Lessons from the break-up of Czechoslovakia," ZEI Working Papers B 17-1999, University of Bonn, ZEI - Center for European Integration Studies.
- L. Bini-Smaghi, 1998. "The democratic accountability of the European Central Bank," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 51(205), pages 119-143.
- W.H. Buiter, 1999.
"Alice in Euroland,"
CEP Discussion Papers
dp0423, Centre for Economic Performance, LSE.
- Eduardo Levy Yeyati & Alain Ize, 2005.
"Financial De-Dollarization; Is it for Real?,"
IMF Working Papers
05/187, International Monetary Fund.
- Sachs, Jeffrey & Sala-i-Martin, Xavier, 1992.
"Fiscal Federalism and Optimum Currency Areas: Evidence for Europe from the United States,"
CEPR Discussion Papers
632, C.E.P.R. Discussion Papers.
- Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
- Rodrik, Dani, 2002.
CEPR Discussion Papers
3524, C.E.P.R. Discussion Papers.
- Alberto Alesina & Vittorio Grilli, 1993. "On The Feasibility Of A One-Speed Or Multispeed European Monetary Union," Economics and Politics, Wiley Blackwell, vol. 5(2), pages 145-165, 07.
- Cooper,Russell, 1999. "Coordination Games," Cambridge Books, Cambridge University Press, number 9780521578967, june. pag.
- Barry Eichengreen, 2004.
"Institutions for Fiscal Stability,"
CESifo Economic Studies,
CESifo, vol. 50(1), pages 1-25.
- Eichengreen, Barry, 2003. "Institutions for Fiscal Stability," Institute of European Studies, Working Paper Series qt34p6v7pt, Institute of European Studies, UC Berkeley.
- Jakob de Haan & Sylvester C.W. Eijffinger, 2000. "The Democratic Accountability of the European Central Bank: A Comment on Two Fairy-tales," Journal of Common Market Studies, Wiley Blackwell, vol. 38(3), pages 393-407, 09.
- Mongelli, Francesco Paolo & Vega, Juan Luis, 2006. "What effects is EMU having on the euro area and its member countries? An overview," Working Paper Series 0599, European Central Bank.
- Jonas Fischer & Lars Jonung & Martin Larch, 2007.
"101 Proposals to reform the Stability and Growth Pact. Why so many? A Survey,"
European Economy - Economic Papers 2008 - 2015
267, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Larch, Martin & Jonung, Lars & Fischer, Jonas, 2008. "101 proposals to reform the Stability and Growth Pact. Why so many? A survey," MPRA Paper 20592, University Library of Munich, Germany.
- Scott, Hal S, 1998. "When the Euro Falls Apart," International Finance, Wiley Blackwell, vol. 1(2), pages 207-28, December.
- Buiter, Willem H. & Sibert, Anne, 2005. "How the Eurosystem’s Treatment of Collateral in its Open Market Operations Weakens Fiscal Discipline in the Eurozone (and what to do about it)," CEPR Discussion Papers 5387, C.E.P.R. Discussion Papers.
- Lars Jonung & Cristina Conflitti, 2008. "Is the euro advantageous? Does it foster European feelings? Europeans on the euro after five years," European Economy - Economic Papers 2008 - 2015 313, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- L. Bini-Smaghi, 1998. "The democratic accountability of the European Central Bank," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 51(205), pages 119-143.
- Peter M. Garber, 1998. "Notes on the Role of TARGET in a Stage III Crisis," NBER Working Papers 6619, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13393. 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: ()
If references are entirely missing, you can add them using this form.