Next Article in Journal
Patterns, Characteristics, and Correlates of Adolescent Bully-Victims in Urban Tanzania
Next Article in Special Issue
Debt Contagion in Europe: A Panel-Vector Autoregressive (VAR) Analysis
Previous Article in Journal
Determinants for Bullying Victimization among 11–16-Year-Olds in 15 Low- and Middle-Income Countries: A Multi-Level Study
Previous Article in Special Issue
The European Social Market Model in Crisis: At a Crossroads or at the End of the Road?
Soc. Sci. 2013, 2(4), 221-233; doi:10.3390/socsci2040221
Article

The Eurozone Crisis: Muddling through on the Way to a More Perfect Euro Union?

Received: 11 September 2013 / Revised: 29 September 2013 / Accepted: 17 October 2013 / Published: 18 October 2013
(This article belongs to the Special Issue The Eurozone Crisis: A Multidisciplinary Perspective)
Download PDF [234 KB, uploaded 18 October 2013]

Abstract

Taking a historical perspective of economic changes, this paper argues that muddling through crises-induced reforms characterizes well the evolutionary process of forming currency unions. The economic distortions facing the euro include structural challenges in the labor and product markets, and financial distortions. While both structural and financial distortions are costly and prevalent, they differ in fundamental ways. Financial distortions are moving at the speed of the Internet, and their welfare costs are determined more by the access to credit lines and leverage, than by the GDP of each country. In contrast, the structural distortions are moving at a slow pace relative to the financial distortions, and their effects are determined by inter-generational dynamics. These considerations suggest that the priority should be given to dealing with the financial distortions. A more perfect Eurozone is not assured without successfully muddling through painful periodic crises.
Keywords: the euro crisis; structural distortions; financial distortions; reforms the euro crisis; structural distortions; financial distortions; reforms
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Share & Cite This Article

Further Mendeley | CiteULike
Export to BibTeX |
EndNote
MDPI and ACS Style

Aizenman, J. The Eurozone Crisis: Muddling through on the Way to a More Perfect Euro Union? Soc. Sci. 2013, 2, 221-233.

View more citation formats

Article Metrics

Comments

Cited By

[Return to top]
Soc. Sci. EISSN 2076-0760 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert