Tough Love: The True Nature of the Eurozone Crisis

There are a number of misconceptions about the ongoing Eurozone crisis. One is that it is a debt crisis: in fact many countries that are considered to be reasonably sound have bigger long-term fiscal deficit problems than even the weakest Eurozone countries. The crisis partly reflects the pain of fr...

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Bibliographic Details
Published in:Business economics (Cleveland, Ohio) Ohio), 2012-07, Vol.47 (3), p.177-189
Main Author: SCHMIEDING, HOLGER
Format: Article
Language:English
Subjects:
Banking crises
Business and Management
Central banks
Debt restructuring
Deficit financing
Economic crises
Economic crisis
Economic growth
Economic recessions
Economic theory
Economics
Economics and Finance
Euro Zone
European Central Bank
Eurozone
Federal budget deficit
Financial risk
Fiscal policy
Forecasts and trends
GDP
Gross Domestic Product
International economic relations
International financial institutions
Market trend/market analysis
Original Article
Political Economy/Economic Systems
Presidential elections
Public debt
Purchasing managers index
Securities industry
Sovereign debt
Studies
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Summary:There are a number of misconceptions about the ongoing Eurozone crisis. One is that it is a debt crisis: in fact many countries that are considered to be reasonably sound have bigger long-term fiscal deficit problems than even the weakest Eurozone countries. The crisis partly reflects the pain of frontloaded fiscal repair. But even more so, the crisis has turned into a step-by-step attempt to forge a stronger and more coherent Europe. The reluctance of the European Central Bank to defuse the tensions which this process creates makes the region vulnerable to bouts of market turmoil. This paper outlines the course of the crisis, the policy responses to date, and the actions that are necessary to resolve it.
ISSN:0007-666X
1554-432X
DOI:10.1057/be.2012.17