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6 - Coping with Economic Crises through Learning by Doing

An Evolving Policy Response

from Part I - The Economic and Monetary Union

Published online by Cambridge University Press:  28 September 2023

By
Iain Begg
Edited by
Dariusz Adamski ,
Fabian Amtenbrink  and
Jakob de Haan
Dariusz Adamski
Affiliation:
University of Wroclaw
Fabian Amtenbrink
Affiliation:
Erasmus Universiteit Rotterdam
Jakob de Haan
Affiliation:
University of Groningen
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Summary

The series of crises after 2007 exposed shortcomings in the design of Economic and Monetary Union (EMU) in Europe and the difficulty of arriving at solutions. This chapter traces the evolving policy responses to these crises and asks whether they go far enough to underpin the future sustainability and resilience of the eurozone. It examines the background to the problems EMU encountered, then contrasts the policy responses to the sovereign debt crisis of the early 2010s with those enacted to deal with the economic consequences of COVID-19. Although the extent of governance reform in the EU and, specifically, the eurozone is prone to be under-estimated, more needs to be done. The chapter identifies and analyses several remaining gaps in the governance framework, focusing on three areas: the future of EU fiscal rules, the need for and likely nature of a supranational fiscal capacity, and the consequences of economic divergence among eurozone members. It concludes that despite some consensus on what needs to be done, decisive action is needed to strengthen the governance of the eurozone, failing which, the future resilience of the euro cannot be taken for granted. The challenges are as much political as technical.

Type
Chapter
Information
The Cambridge Handbook of European Monetary, Economic and Financial Integration , pp. 106 - 124
Publisher: Cambridge University Press
Print publication year: 2023

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