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Failing Institutions Are at the Core of the Euro Crisis

Author

Listed:
  • Yochanan Shachmurove

    () (Department of Economics and Business, The City College of The City University of New York,and Department of Economics, The University of Pennsylvania)

  • Alojzy Z. Nowak

    () (University of Warsaw, Poland)

Abstract

The European Union was created to promote economic, cultural, and regional prosperity. However, the Global Financial Crisis demonstrates that its economic institutions are flawed. While each sovereign state in the Eurozone forfeits the control of its money supply, the lack of a common fiscal institution allows individual countries to pursue their own political and financial agendas. The on-going economic hardship emphasizes the critical role of economic and political institution ions. This paper analyzes both beneficial and perverse incentives of joining the European Union, discusses the consequences of deficient economic institutions and provides potential solutions towards the alleviation of the crisis.

Suggested Citation

  • Yochanan Shachmurove & Alojzy Z. Nowak, 2012. "Failing Institutions Are at the Core of the Euro Crisis," PIER Working Paper Archive 12-041, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:12-041
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    File URL: http://economics.sas.upenn.edu/sites/economics.sas.upenn.edu/files/12-041_0.pdf
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    References listed on IDEAS

    as
    1. Dellas, Harris & Tavlas, George S., 2009. "An optimum-currency-area odyssey," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1117-1137, November.
    2. Mongelli, Francesco Paolo & De Grauwe, Paul, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 468, European Central Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    European Union; Eurozone; Harmonized Index of Consumer Prices; Portugal; Ireland; Greece and Spain (PIGS); Fiscal Union; Financial Crises; Maastricht Criteria; Maastricht Treaty; Exchange Rate; Euro;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • K0 - Law and Economics - - General

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