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Tuesday, October 28, 2014

The Importance of Being Europe — Money, Banking and Financial Markets

The Importance of Being Europe — Money, Banking and Financial Markets

Two of the papers mentioned:

Enrico Spolaone : What Is European Integration Really About? A Political Guide for Economists

"Europe's monetary union is part of a broader process of integration that started in the aftermath of World War II. In this "political guide for economists," we look at the creation of the euro within the bigger picture of European integration. How and why were European institutions established? What is European integration really about? We address these questions from a political-economy perspective, building on ideas and results from the economic literature on the formation of states and political unions. Specifically, we look at the motivations, assumptions, and limitations of the European strategy initiated by Jean Monnet and his collaborators of partially integrating policy functions in a few areas with the expectation that more integration will follow in other areas in a sort of chain reaction toward an "ever-closer union." The euro with its current problems is a child of that strategy and its limits.

L.Guiso, P.Sapienza, L.Zingales for Brookings : "Monnet’s Error?"

"Do partial steps toward European integration generate support for further steps or do they create a political backlash? We try to answer this question by analyzing the cross sectional and time series variation in pro-European sentiment in the EU 15 countries. The two major steps forward (the 1992 Maastricht Treaty and the 2004 enlargement) seem to have reduced the pro-Europe sentiment as does the 2010 Eurozone crisis. Yet, in spite of the worst recession in recent history,

the Europeans still support the common currency. Europe seems trapped in catch-22: there is no desire to go backward, no interest in going forward, but it is economically unsustainable to stay


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