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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

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

Martin Sandbu

Princeton University Press

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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