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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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The Politics That the Euro Needs

The Politics That the Euro Needs

Chapter:
(p.217) Nine The Politics That the Euro Needs
Source:
Europe's Orphan
Author(s):

Martin Sandbu

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691175942.003.0009

This chapter reflects on the political imperative of establishing a coalition among eurozone countries and institutions that can achieve the economic goals listed in the previous chapter and articulates an alternative to the transfers-for-centralised-control paradigm that is driving voters to political extremes. There is one alternative which it has been claimed does not exist: greater national autonomy to pursue countercyclical fiscal policies combined with a framework for orderly sovereign debt restructuring; a eurozone fiscal framework that prioritises the collective fiscal stance; and mutualised debt issuance by a coalition of the willing. Such an alternative, if it had been pursued early in the crisis, would have addressed the balance-of-payments vulnerability of weaker euro members, reduced the cost of stagnation by requiring less austerity, and avoided the strain that the ‘no alternative’ rhetoric has inflicted on Europe's democracies.

Keywords:   eurozone countries, national autonomy, countercyclical fiscal policies, sovereign debt restructuring, mutualised debt issuance, collective fiscal stance

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