Going Forward from B to A? Proposals for the Eurozone Crisis

Levy Economics Institute, Working Papers Series

23 Pages Posted: 19 May 2016

See all articles by Massimo Amato

Massimo Amato

Bocconi University - Department of Policy Analysis and Public Management

Luca Fantacci

Bocconi University - Department of Policy Analysis and Public Management

Dimitri B. Papadimitriou

Bard College - Levy Economics Institute

Gennaro Zezza

University of Cassino - Department of Economics; Bard College - The Levy Economics Institute

Date Written: May 18, 2016

Abstract

After reviewing the main determinants of the current eurozone crisis, this paper discusses the feasibility of introducing fiscal currencies as a way to restore fiscal space in peripheral countries, like Greece, that have so far adopted austerity measures in order to abide by their commitments to eurozone institutions and the International Monetary Fund. We show that the introduction of fiscal currencies would speed up the recovery, without violating the rules of eurozone treaties. At the same time, these processes could help transition the euro from its current status as the single currency to the status of “common clearing currency,” along the lines proposed by John Maynard Keynes at Bretton Woods as a system of international monetary payments. Eurozone countries could therefore move from “Plan B,” aimed at addressing member-state domestic problems, to a “Plan A” for a better European monetary system.

Keywords: Euro, Fiscal Currencies, Austerity, Current Account Imbalances, Clearing Union

JEL Classification: E02, E12, E42, F45

Suggested Citation

Amato, Massimo and Fantacci, Luca and Papadimitriou, Dimitri B. and Zezza, Gennaro, Going Forward from B to A? Proposals for the Eurozone Crisis (May 18, 2016). Levy Economics Institute, Working Papers Series, Available at SSRN: https://ssrn.com/abstract=2781606 or http://dx.doi.org/10.2139/ssrn.2781606

Massimo Amato (Contact Author)

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Luca Fantacci

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Dimitri B. Papadimitriou

Bard College - Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758 7711 (Phone)
845-758 9424 (Fax)

Gennaro Zezza

University of Cassino - Department of Economics ( email )

Cassino
Italy

HOME PAGE: http://gennaro.zezza.it

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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