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Eurozone’s Future: Convergence, Restructuring or “Muddling Through”?

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  • Antonin Rusek

    (Susquehanna University, USA)

Abstract

The mixture of the recent EU policies – mainly the “fiscal compact” and the OMT approach by the ECB – restored the nominal stability for the Eurozone and therefore preserved the common currency. However, the same steps resulted in a widening gap between the Northern tier and the Mediterranean countries – the real divergence. To address this issue – which is potentially a mortal threat to the Eurozone in its present configuration – the three policy options are available: A restoration of a real convergence, the Eurozone?s restructuring or a “muddling through”. The first two require radical policy steps which in the present political and economic climate are very unlikely. That leaves “muddling through” as the likeliest future approach. However, its inherent ad hoc nature breeds uncertainty, which, combined with a complacency stemming from the recent “successes” increases the possibility of a destructive future dynamics. Keywords: EU North – South Divergence, Nominal Convergence vs. Real Divergence

Suggested Citation

  • Antonin Rusek, 2014. "Eurozone’s Future: Convergence, Restructuring or “Muddling Through”?," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 2(3), pages 45-56.
    • Handle: RePEc:ejn:ejefjr:v:2:y:2014:i:3:p:45-56
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    References listed on IDEAS

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    Cited by:

    1. Nihal Bayraktar & Blanca Moreno-Dodson, 2018. "Public Expenditures And Growth In A Monetary Union: The Case Of Waemu," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 6(1), pages 107-132.

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