Fiscal policy in the Eurozone

This chapter discusses how European nation states participating in the Eurozone gave up their monetary sovereignty as defined by Modern Money Theory. The national governments became users, not issuers of currency. The lack of currency sovereignty affected Eurozone member countries’ ability to address the fallout from the Global Financial Crisis leading to high unemployment and stagnating economies, especially in the periphery of the Eurozone. However, with recent policy changes in the aftermath of the Covid-19 pandemic, the national governments have regained the status of issuers of currency. After going through the example of government spending in Germany, this chapter looks at fiscal policy in the Eurozone from 1999 to 2020.