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Europe's OrphanThe Future of the Euro and the Politics of Debt$
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Martin Sandbu

Print publication date: 2017

Print ISBN-13: 9780691175942

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691175942.001.0001

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Europe’s Real Economic Challenges

Europe’s Real Economic Challenges

Chapter:
(p.189) Eight Europe’s Real Economic Challenges
Source:
Europe's Orphan
Author(s):

Martin Sandbu

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691175942.003.0008

This chapter defines the three main economic challenges of the members of the single currency. The first is to deal better with balance-of-payments crises — both finish the job of fixing the financial fragmentation from 2010–11 and safeguard against future ones. This is a financial and monetary task, one of ensuring that capital flows across national borders in an orderly and efficient way. The second challenge is a ‘real economy’ task of ensuring that each economy's resources are fully employed: the classic macroeconomic problem of aggregate demand management. Both of these tasks are largely about undoing self-inflicted errors. Finally, the long-run challenge is to make labour and capital as productive as they can be, which is what sustains long-term improvement in living standards.

Keywords:   economic challenges, single currency, balance-of-payments crises, financial fragmentation, aggregate demand management, labour

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