Failing Institutions Are at the Core of the Euro Crisis
36 Pages Posted: 23 Oct 2012
Date Written: October 22, 2012
The European Union was created to promote economic, cultural, and regional prosperity. However, the Global Financial Crisis demonstrates that its economic institutions are flawed. While each sovereign state in the Eurozone forfeits the control of its money supply, the lack of a common fiscal institution allows individual countries to pursue their own political and financial agendas. The on-going economic hardship emphasizes the critical role of economic and political institution ions. This paper analyzes both beneficial and perverse incentives of joining the European Union, discusses the consequences of deficient economic institutions and provides potential solutions towards the alleviation of the crisis.
Keywords: European Union, Eurozone, Harmonized Index of Consumer Prices, Portugal, Ireland, Greece and Spain (PIGS), Fiscal Union, Financial Crises, Maastricht Criteria, Maastricht Treaty, Exchange Rate, Euro
JEL Classification: B52, F00, F01, F33, K0
Suggested Citation: Suggested Citation