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Weathering the crisis and beyond: perspectives for the Euro area

Author

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  • Christoph Schmidt
  • Benjamin Weigert

Abstract

The Euro area is experiencing a severe and highly complex crisis. It comprises three problem areas: the difficulties of some highly indebted European sovereigns to ascertain funding at palatable cost, the disconcerting fragility of the European banking system and disappointing growth prospects in the Euro area periphery. To make matters even worse, these problems have developed into a systemic crisis of the European Monetary Union (EMU), since observers have apparently developed fundamental doubts over its integrity. To overcome this systemic crisis, it would not be sufficient, if only the stronger Euro area economies provided more solidarity, nor would it be sufficient, if only all of Europe adhered to ironclad budgetary discipline from now on. A European Redemption Pact could be a strong political commitment to the EMU and offer a bridge between the proponents of fiscal discipline and structural reform and those governments advocating more support. This pact would entail two indispensable aspects, the codification of a credible and coherent reform path and a temporary and limited instrument for joint refinancing. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Christoph Schmidt & Benjamin Weigert, 2013. "Weathering the crisis and beyond: perspectives for the Euro area," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 564-595, August.
    • Handle: RePEc:kap:itaxpf:v:20:y:2013:i:4:p:564-595
    DOI: 10.1007/s10797-013-9290-z
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    Cited by:

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    2. Projektgruppe Gemeinschaftsdiagnose, 2013. "Deutsche Konjunktur erholt sich – Wirtschaftspolitik stärker an der langen Frist ausrichten," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(08), pages 03-77, April.
    3. Philipp Heimberger, 2023. "Do Interest-growth Differentials Affect Fiscal Policy? Evidence for Advanced Economies," wiiw Working Papers 230, The Vienna Institute for International Economic Studies, wiiw.
    4. Eszter Boros, 2017. "Endogenous Imbalances in a Single Currency Area," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(2), pages 86-118.
    5. Claudia M. Buch & Benjamin Weigert, 2019. "Macroprudential policy in a currency union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 23-33, February.

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    More about this item

    Keywords

    Euro crisis; Governance of the Euro area; Debt sustainability; Financial market regulation; European redemption pact; E60; E42; H6; G28;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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