What Does the 1930s' Experience Tell Us About the Future of the Eurozone?

15 Pages Posted: 4 Jun 2014

Date Written: July 2014

Abstract

If the eurozone follows the precedent of the 1930s, it will not survive. The attractions of escaping from the gold standard then were massive and they point to a strategy of devalue and default for today's crisis countries. A fully federal Europe with a banking union and a fiscal union is the best solution, but it may be politically infeasible. However, it may be possible to underpin the euro with a ‘Bretton Woods Compromise’ that accepts some retreat from deep economic integration and provides greater policy space since exit entails risks of financial crisis that were not present 80 years ago. This symposium item belongs to a section headed: SYMPOSIUM: THE GREAT DEPRESSION AND THE EUROZONE CRISIS: LEARNING FROM THE PAST, which also includes The Interwar Gold Standard in Light of the Present by David Bholat, Gold Standard Lessons for the Eurozone? by Matthias Morys, Policy Options for the Euro: Heterodoxy Ahead? by Scott Urban.

Suggested Citation

Crafts, Nicholas, What Does the 1930s' Experience Tell Us About the Future of the Eurozone? (July 2014). JCMS: Journal of Common Market Studies, Vol. 52, Issue 4, pp. 713-727, 2014. Available at SSRN: https://ssrn.com/abstract=2445722 or http://dx.doi.org/10.1111/jcms.12145

Nicholas Crafts (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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