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The Eurozone Crisis: Institutional Setting, Structural Vulnerability, and Policies

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  • Bruno Dallago
  • Chiara Guglielmetti

Abstract

The unfolding of the crisis in the Eurozone can be explained by the interaction of institutional features and policy failures, and by their interconnection with real and financial imbalances. The crisis has shown that internal divergence in the EZ is based on important structural components which are unsustainable in the long run. Indeed, the crisis has magnified the gap between the vulnerable peripheral member countries and a more resilient core. The paper analyses those factors that opened the way to the diffusion of the financial and economic crisis in the Eurozone. It also discusses the structural consequences of these events and critically analyses the institutional and political reforms which the Eurozone is facing in order to enhance its capability to cope with external shocks.

Suggested Citation

  • Bruno Dallago & Chiara Guglielmetti, 2011. "The Eurozone Crisis: Institutional Setting, Structural Vulnerability, and Policies," Openloc Working Papers 1112, Public policies and local development.
    • Handle: RePEc:trn:utwpol:1112
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    File URL: http://openloc.eu/cms/storage/openloc/working_papers/2011/DallagoGuglielmetti2011.pdf
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    References listed on IDEAS

    as
    1. Kaminsky, Graciela L. & Reinhart, Carmen M., 2000. "On crises, contagion, and confusion," Journal of International Economics, Elsevier, vol. 51(1), pages 145-168, June.
    2. Reinhart, Carmen & Rogoff, Kenneth, 2010. "Debt and Growth Revisited," MPRA Paper 24376, University Library of Munich, Germany.
    3. Calvo, Sara & Reinhart, Carmen, 1996. "Capital flows to Latin America : Is there evidence of contagion effects?," Policy Research Working Paper Series 1619, The World Bank.
    4. Manasse, Paolo & Roubini, Nouriel, 2009. ""Rules of thumb" for sovereign debt crises," Journal of International Economics, Elsevier, vol. 78(2), pages 192-205, July.
    5. Ashley Hodgson & Stacey L. Schreft & Aarti Singh, 2005. "Jobless recoveries and the wait-and-see hypothesis," Economic Review, Federal Reserve Bank of Kansas City, vol. 90(Q IV), pages 81-99.
    6. Raghuram G. Rajan, 2010. "Fault Lines: How Hidden Fractures Still Threaten the World Economy," Economics Books, Princeton University Press, edition 1, number 9111.
    7. Hans-Werner Sinn, 2010. "Rescuing Europe," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(SPECIALIS), pages 1-22, August.
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    Cited by:

    1. Mező, Júlia & Udvari, Beáta, 2012. "Effects of the debt crisis on the EU-China relations," MPRA Paper 40367, University Library of Munich, Germany.
    2. Batavia, Bala & Nandakumar, Parameswar & Wague, Cheick, 2013. "Export stagnation and budget deficits in the peripheral EU nations with EMU membership," The Journal of Economic Asymmetries, Elsevier, vol. 10(2), pages 94-100.

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    More about this item

    Keywords

    Eurozone; European Union; European Monetary Union; euro; Common fiscal parameters; Real convergence; Productivity;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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