Reflections on the Euro Crisis
Once eclipsed by, first, the dynamism of the US economy and then the formidable expansion of emerging countries, the Eurozone has come back to the fore of global preoccupations. It seems to matter again, but mainly through the harm that its current predicament can bring to the world economy. The Eurozone seems to cumulate four major crises in a potentially lethal combination: a crisis of current and potential growth, a crisis of government debt, a banking crisis, and a political crisis characterized by a patent lack of trust and shared vision.
In such a context, this short paper argues that the focus that emerged on the urgency of fiscal consolidation misses the point and can have deleterious effects. The paper starts with a short discussion about the fiscal situation before briefly addressing the other dimensions of the crisis and concluding.
KeywordsGross Domestic Product Public Debt European Central Bank Debt Ratio Fiscal Deficit
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