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Going Forward from B to A? Proposals for the Eurozone Crisis

Author

Listed:
  • Massimo Amato

    (Department of Policy Analysis and Public Management, Università Bocconi, Milano 20136, Italy)

  • Luca Fantacci

    (Department of Policy Analysis and Public Management, Università Bocconi, Milano 20136, Italy)

  • Dimitri B. Papadimitriou

    (Levy Economics Institute, Bard College, Annandale-on-Hudson 12504, NY, USA)

  • Gennaro Zezza

    (Department of Economics and Law, Università di Cassino e del Lazio Meridionale, Cassino 03043, Italy)

Abstract

After reviewing the main determinants of the current Eurozone crisis, this paper discusses the feasibility of introducing fiscal currencies as a way to restore fiscal space in peripheral countries, such as Greece, which have so far adopted austerity measures in order to abide by their commitments with Eurozone institutions and the IMF. We show that the introduction of fiscal currencies would speed up the recovery, without violating the rules of Eurozone Treaties. At the same time, these processes could help the transition of the euro from its current status of single currency to a status of “common clearing currency” along the lines proposed by Keynes at Bretton Woods as a system of international settlements. Eurozone countries could therefore move from “Plan B” aimed at addressing member state domestic problems, to a “Plan A” of a better European monetary system.

Suggested Citation

  • Massimo Amato & Luca Fantacci & Dimitri B. Papadimitriou & Gennaro Zezza, 2016. "Going Forward from B to A? Proposals for the Eurozone Crisis," Economies, MDPI, vol. 4(3), pages 1-14, August.
    • Handle: RePEc:gam:jecomi:v:4:y:2016:i:3:p:18-:d:76593
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    References listed on IDEAS

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    Cited by:

    1. Dimitri B. Papadimitriou & Francesco Zezza & Gennaro Zezza, 2020. "When Will Italy Recover?," Economics Strategic Analysis Archive sa_10_20, Levy Economics Institute.
    2. Sergio Cesaratto & Gennaro Zezza, 2018. "What went wrong with Italy, and what the country should now fight for in Europe," FMM Working Paper 37-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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    More about this item

    Keywords

    euro; fiscal currencies; austerity; current account imbalances; Clearing Union;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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