Europe's Crisis, Europe's Future
Publication Year: 2014
Can the eurozone's emergence from crisis turn into a real economic recovery and a new vision for Europe's future? Or is Europe heading for a "lost decade" in terms of growth and a rise in old style nationalism? Kemal Dervi and Jacques Mistral have assembled an international group of economic analysts who provide perspectives on the most audacious supranational governance experiment in history. Will the crisis mark the end of the dream of "ever closer union" or lead to a renewed impetus to integrate, perhaps taking novel forms?
Among the key issues explored are the
· Onset, evolution, and ramifications of the euro crisis from the perspective of three countries especially hard hit Greece, Italy, and Spain.
· Concerns, priorities, and issues in France and Germany, the couple that has so far always driven European integration.
· Effects and lessons in two key policy areas: banking union and social policies.
The volume concludes with a possible renewed vision for the EU in the 2020s, including much greater political integration but where some countries may keep their national currencies and share less of their sovereignty. It is a vision of two Europes within one, ready for the twenty-first century.
Published by: Brookings Institution Press
Title Page, Copyright
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There is strong hope that 2014 will be a year of renewed growth in the eurozone, even in the countries that were in deep crisis for several years. The resumption of growth would of course be good news but will not resolve the tremendous pressures generated by high unemployment and social difficulties that remain widespread, even beyond Southern Europe. The year 2014 will also see elections to the European Parliament, with the prospect that euro-skeptic parties will find new support...
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1. Europe's Crisis, Europe's Future: An Overview
Kemal Dervis¸ and Jacques Mistral
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The economic crisis that started in Greece in late 2009 quickly spread to Ireland and Portugal and then to Spain and Italy. After becoming a major eurozone crisis, it eventually came to threaten the global system in the autumn of 2011. And like the subprime crisis in 2008, no one had predicted it...
Part I: Country Perspectives
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2. Greece: Tax Anything That Moves!
Michael Mitsopoulos and Theodore Pelagidis
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Open markets with clear and properly enforced rules support competition and the growth of productivity. Recent works, such as that of Cacciatore, Duval, and Fiori (2012), now indicate that product market reforms can also create growth with minimal downside, especially in depressed economies...
3. Spain: A New Quest for Growth
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Over the past six years, Spain has suffered a severe economic, social, and institutional crisis. A country that for over a decade showed impressive growth figures and came to be seen as a poster child for eurozone growth suddenly found itself mired in an economic recession of unprecedented proportions in its recent history. At the time of this writing in early 2014, the economy seems to be improving, having undergone some key adjustments and with growth and employment showing encouraging signs...
4. Italy: Strategies for Moving from Crisis to Growth
Domenico Lombardi and Luigi Paganetto
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The current economic crisis in Italy stems from a period of stagnating growth and little progress in total factor productivity that began, it should be stressed, a decade before the global financial crisis of 2008. The governor of the Bank of Italy (2013) stated that the country “failed to respond to the extraordinary geopolitical, technological, and demographic trends of the last quarter-century” (p. 10). This is evident from the exceptional growth in other major advanced economies in the late 1990s and early part of the 2000s, growth that was absent in Italy...
5. France: Part of the Solution or Part of the Problem?
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On November 17, 2012, The Economist published a special issue on France. On the cover, baguettes wearing berets were collected in a bucket, like sticks of dynamite, with fuses; the story described France as a “time bomb ticking at the core of the Eurozone.” It got a big reaction. “Another British treachery” was the most objective reaction heard in Paris; Minister Arnaud Montebourg used much harsher words...
6. Germany: Contraints in the Crisis
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Whether German politicians and voters like it or not, their country today carries a particular responsibility for the future of Europe. Since a deep and self-intensifying crisis of confidence shattered the euro area in the year 2010, the overall good state of the German economy has become one of the important assets in the European aspiration for new credibility. It is inevitable and completely natural that this constellation results in conflicting views and interests...
Part II: Cross-Cutting Issues
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7. The Financial Sector: Key Issues for the European Banking Union
Douglas J. Elliott
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European leaders have committed to the creation of a “banking union,” in which there will be an integration of (1) bank regulation, (2) bank supervision, (3) deposit guaranties, (4) and dealing with troubled banks (known as “resolution”). Geographically, the banking union will encompass the euro area with the addition, on a voluntary basis, of most of the other members of the European Union (EU)...
8. Building a Stronger Union: Social Policies in Europe and the Management of the Debt Crisis
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The European integration project has been built on a broad concept of convergence, common regulation of markets and promotion of competition, shared prosperity, and a common standard of democracy. This multidimensional convergence has progressed quite well since the Rome Treaty in 1957, followed by the Single European Act in 1986–87, the creation of the European Union in 1992, the introduction of the single currency in 1999–2002, and, most recently, the “Eastern enlargement” in 2004...
Visions for Europe: Democratic Legitimacy and EU Institutions
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The Europe that emerged from the catastrophic first half of the twentieth century was like a dream come true. It embodied a transformative vision, it opened the way for decades of peace and prosperity; it first imagined, and then created, strong institutions. For a long time it had democratic legitimacy, not because the nature of the decisionmaking mechanisms as such augmented democracy, but because the broad vision at the top was broadly in line with the aspirations and the understanding of the citizens...
Appendix: Economic Data for Select European Economies, 2000-14
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Page Count: 212
Publication Year: 2014