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What Does the 1930s' Experience Tell Us about the Future of the Eurozone?
Author(s) -
Crafts Nicholas
Publication year - 2014
Publication title -
jcms: journal of common market studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.54
H-Index - 90
eISSN - 1468-5965
pISSN - 0021-9886
DOI - 10.1111/jcms.12145
Subject(s) - point (geometry) , european union , economics , european debt crisis , financial crisis , banking union , space (punctuation) , keynesian economics , international economics , political science , european integration , philosophy , geometry , mathematics , linguistics
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 ‘ B retton W oods C ompromise’ 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.