2017 Chapters (Layout Features)

The Fundamental Flaws in the Euro Zone Framework

Stiglitz, Joseph E.

Europe has not done well in the years since the 2008 crisis, with a double dip recession and a recovery far slower than that of the US from whence the crisis came. Among the key reasons for this dismal performance is the euro, or more precisely, the structure of the Eurozone, the institutions, rules, and regulations that were created to ensure growth and stability of a single currency amongst a diverse set of countries—and the failure to do some of the things (like the establishment of a common deposit insurance system) that should have been done. The paper describes how Europe created a divergent system, with increasing disparities between the richer and poorer countries, and the role of certain beliefs, prevalent at the time, but since questioned, about what makes for good economic performance.