The Political Economy of the Euro Crisis

Abstract

This article introduces the special issue on the political economy of the Euro crisis, which aims to improve our understanding of the causes, consequences, and implications of the highly unusual nature of this crisis: a financial crisis among developed countries within a supranational monetary union. The article provides a brief chronology of the crisis, discusses its underlying causes, and reviews the ways in which comparative and international political economy can help us understand the crisis. The article then discusses the individual and collective contributions of the articles in the special issue and discusses possible future research paths on the political economy of the Euro crisis. We conclude with a brief discussion of how a political economy perspective informs our understanding of the long-term prospects for the Eurozone and European integration.

Public Attention, Governmental Bargaining, and Supranational Activism: Explaining European Integration in Response to Crises

“…The adoption of the ‘single supervisory mechanism’ for large banks in the euro erea on 22 October 2013 arguably marks the end point of the Euro Crisis. Even though the economic situation in Greece and other southern EU Member States, particularly Italy, remained critical in the following years (Copelovitch et al ., , p. 816), the risk of contagion in the euro area disappeared in the months after that decision was taken (see Dawson et al ., , p. 1).…”

The Troika's Variations on a Trio: Why the Loan Programmes Worked so Differently in Greece, Ireland, and Portugal

“…In all the periphery countries (Greece, Ireland, Portugal, and Spain), the net external debt of the periphery countries grew rapidly as a result. The 'sudden stop' of the international credit crisis left the highly over-exposed banks of the 'core' economies with huge liabilities (Baldwin and Giavazzi 2015, Copelovitch, Frieden, and Walter 2016, Merler and Pisani-Ferry 2012, Jones 2015. The sudden stop in turn precipitated the fiscal crises that became the first focus of the Eurozone crisis (Dellepiane-Avellaneda et al forthcoming).…”

Breaking up Is Hard to Do: Why the Eurozone Will Survive

“…the joint effects of the global financial crisis and the euro crisis have caused more lasting economic damage in Europe than the Great Depression of the 1930s." [9] While the dominant popular narrative of the crisis, imposed ex post to be sure, is one of fiscal irresponsibility, the reality is much more complex and does not lend itself to simple solutions such as an austerity program. The politics of austerity are difficult but at least they hold forth the hope that fiscally irresponsible countries can get their houses in order if only they can rein in spending, cut government programs, and collect their taxes efficiently.…”