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Governance without government or: The Euro Crisis and what went wrong with European Economic Governance?


  • Heise, Arne


The Great Recession after 2008 did not turn out to be as deep and severe as the Great Depression of the 1930s. According to the European Commission, this positive result is due to the fact that economic policy-makers around the world learnt their lessons from the Great Depression in stabilizing their financial systems and, moreover, that particularly the European Union and its economic governance system has become a shelter against negative external shocks in coordinating stabilization policies to maintain aggregate demand. This paper argues that the claim of the European Commission needs some qualifications: on the one hand, the lessons have not been applied appropriately in all EU and, particularly, Eurozone Member States. This is, on the other hand, not merely the result of mismanagement of individual governments but the systematic outcome of an ineffective and even counterproductive European economic governance system. Although, in the wake of the Euro Crisis some crisis control and emergency measures have been established, crisis resolution has failed as the core of the inefficient governance system - the European Stability and Growth Pact (ESGP) - has not been reformed adequately.

Suggested Citation

  • Heise, Arne, 2012. "Governance without government or: The Euro Crisis and what went wrong with European Economic Governance?," Discussion Papers 32, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
  • Handle: RePEc:zbw:cessdp:32

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    References listed on IDEAS

    1. Gebhard Kirchgässner, 2009. "Die Krise der Wirtschaft: Auch eine Krise der Wirtschaftswissenschaften?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(4), pages 436-468, November.
    2. McCloskey, Donald N, 1983. "The Rhetoric of Economics," Journal of Economic Literature, American Economic Association, vol. 21(2), pages 481-517, June.
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    4. Frederic S. Lee, 2007. "The Research Assessment Exercise, the state and the dominance of mainstream economics in British universities," Cambridge Journal of Economics, Oxford University Press, vol. 31(2), pages 309-325, March.
    5. Stephan Schulmeister, 2010. "Asset Price Fluctuations, Financial Crises and the Stabilizing Effects of a General Transaction Tax," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    6. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
    7. George DeMartino, 2005. "A Professional Ethics Code for Economists," Challenge, Taylor & Francis Journals, vol. 48(4), pages 88-104.
    8. Frederic Lee & Steve Keen, 2004. "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory," Review of Social Economy, Taylor & Francis Journals, vol. 62(2), pages 169-199.
    9. Frederic S. Lee & Therese C. Grijalva & Clifford Nowell, 2010. "Ranking Economics Departments in a Contested Discipline," American Journal of Economics and Sociology, Wiley Blackwell, vol. 69(5), pages 1345-1375, November.
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    More about this item


    Euro Crisis; European Governance; Economic Policy;

    JEL classification:

    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • F15 - International Economics - - Trade - - - Economic Integration
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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