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Monetary union, fiscal crisis and the preemption of democracy

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  • Scharpf, Fritz W.

Abstract

The European Monetary Union (EMU) has removed crucial instruments of macroeconomic management from the control of democratically accountable governments. Worse still, the EMU has systemically caused destabilizing macroeconomic imbalances that member states found difficult or impossible to counteract with their remaining policy instruments. And even though the international financial crisis had its origins beyond Europe, the EMU has greatly increased the vulnerability of some member states to its repercussions. Its effects have undermined the economic and fiscal viability of some EMU member states and have frustrated political demands and expectations to an extent that may yet transform the economic crisis into a crisis of democratic legitimacy. Moreover, present efforts by EMU governments to 'rescue the euro' will do little to correct the economic imbalances and vulnerabilities, but are likely to deepen economic problems and political alienation in both the rescued and the rescuing polities.

Suggested Citation

  • Scharpf, Fritz W., 2011. "Monetary union, fiscal crisis and the preemption of democracy," MPIfG Discussion Paper 11/11, Max Planck Institute for the Study of Societies.
  • Handle: RePEc:zbw:mpifgd:1111
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    References listed on IDEAS

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    1. von Hayek, Friedrich August, 1989. "The Pretence of Knowledge," American Economic Review, American Economic Association, vol. 79(6), pages 3-7, December.
    2. Enderlein, Henrik, 2004. "Nationale Wirtschaftspolitik in der europäischen Währungsunion," Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung Köln, Max Planck Institute for the Study of Societies, volume 49, number 49.
    3. Barry Eichengreen, 2010. "The Breakup of the Euro Area," NBER Chapters,in: Europe and the Euro, pages 11-51 National Bureau of Economic Research, Inc.
    4. Trampusch, Christine, 2009. "Der erschöpfte Sozialstaat: Transformation eines Politikfeldes," Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung Köln, Max Planck Institute for the Study of Societies, volume 66, number 66.
    5. Dyson, Kenneth & Featherstone, Kevin, 1999. "The Road To Maastricht: Negotiating Economic and Monetary Union," OUP Catalogue, Oxford University Press, number 9780198296386.
    6. George Selgin, 2010. "The Secret of the Euro's Success," Econ Journal Watch, Econ Journal Watch, vol. 7(1), pages 78-81, January.
    7. repec:ejw:journl:v:7:y:2010:i:1:p:4-52 is not listed on IDEAS
    8. Baccaro, Lucio & Simoni, Marco, 2010. "Organizational determinants of wage moderation," LSE Research Online Documents on Economics 33510, London School of Economics and Political Science, LSE Library.
    9. Johnson, Harry G, 1971. "The Keynesian Revolution and the Monetarist Counter-Revolution," American Economic Review, American Economic Association, vol. 61(2), pages 1-14, May.
    10. Otmar Issing, 2002. "On Macroeconomic Policy Co-ordination in EMU," Journal of Common Market Studies, Wiley Blackwell, vol. 40(2), pages 345-358, June.
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    Cited by:

    1. Cristina Fernández & Pilar García Perea, 2015. "The impact of the euro on euro area GDP per capita," Working Papers 1530, Banco de España;Working Papers Homepage.
    2. Dorothee Bohle, 2017. "Mortgaging Europe’s periphery," LEQS – LSE 'Europe in Question' Discussion Paper Series 124, European Institute, LSE.

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