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Can Euroland Survive?

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  • Stephanie A. Kelton
  • L. Randall Wray

Abstract

Social unrest across Europe is growing as Euroland's economy collapses faster than the United States', the result of falling exports and a weaker fiscal response. The controversial title of this brief is based on a belief that the nature of the euro itself limits Euroland's fiscal policy space. The nations that have adopted the euro face "market-imposed" fiscal constraints on borrowing because they are not sovereign countries. Research Associate Stephanie A. Kelton and Senior Scholar L. Randall Wray foresee a real danger that these nations will be unable to prevent an accelerating slide toward depression that will threaten the existence of the European Union.

Suggested Citation

  • Stephanie A. Kelton & L. Randall Wray, 2009. "Can Euroland Survive?," Economics Public Policy Brief Archive ppb_106, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_106
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    References listed on IDEAS

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    1. Eichengreen, Barry & von Hagen, Jürgen, 1995. "Fiscal Policy and Monetary Union: Federalism, Fiscal Restrictions and the No-Bailout Rule," CEPR Discussion Papers 1247, C.E.P.R. Discussion Papers.
    2. Philip Arestis & Mosahid Khan & Kul B. Luintel, 2002. "Fiscal Deficits in Monetary Unions: A Comparison of EMU and United States," Eastern Economic Journal, Eastern Economic Association, vol. 28(1), pages 89-103, Winter.
    3. L. Randall Wray, 1998. "Modern Money," Economics Working Paper Archive wp_252, Levy Economics Institute.
    4. Bayoumi, Tamim & Goldstein, Morris & Woglom, Geoffrey, 1995. "Do Credit Markets Discipline Sovereign Borrowers? Evidence from the U.S. States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 1046-1059, November.
    5. C. Sardoni & L.R. Wray, 2006. "Monetary policy strategies of the European Central Bank and the Federal Reserve bank of the United States," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(3), pages 451-472.
    6. Mark M. Spiegel, 1997. "Fiscal constraints in the EMU," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug15.
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    Cited by:

    1. Yeva S. Nersisyan & L. Randall Wray, 2011. "Un excès de dette publique handicape-t-il réellement la croissance ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 173-190.
    2. Ben Ltaief, Leila, 2014. "Dette publique et croissance économique : investigation empirique pour la zone euro, l’Union européenne et les pays avancés," L'Actualité Economique, Société Canadienne de Science Economique, vol. 90(2), pages 79-103, Juin.
    3. Andrea Terzi, 2010. "The "Keynesian Moment" in Policymaking, the Perils Ahead, and a Flow-of-funds Interpretation of Fiscal Policy," Economics Working Paper Archive wp_614, Levy Economics Institute.

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