Six Paradoxes of Eurozone Economic Policies: The Case for a Rethink of the Political Economy of EMU

21 Pages Posted: 19 Jul 2016

See all articles by Rainer Masera

Rainer Masera

Università degli Studi Guglielmo Marconi

Date Written: July 18, 2016

Abstract

The Economic and Monetary Union (EMU) is examined according to a network (complex-system) approach. Problems of idiosyncratic, endogenous and systemic risks are addressed. In this perspective, six economic paradoxes of the Eurozone are identified: inflation, liquidity, saving, de-leveraging, central bank independence from Treasuries, bank capital. They are closely intertwined, but separately identifiable: a common thread is the fallacy of composition. All paradoxes defy current economic policies of EMU, which are critically assessed: suggested lines of an in-depth rethink are predicated by making reference to an enlarged macroprudential policy paradigm, account being taken of the interactions between the different economic policies. Key features of an investment compact to bolster the Juncker Plan and to relaunch sustainable and shared growth are outlined.

Keywords: EMU, macroprudential policies, economic paradoxes

JEL Classification: B4, D85, E51, E58, E61, E63

Suggested Citation

Masera, Rainer, Six Paradoxes of Eurozone Economic Policies: The Case for a Rethink of the Political Economy of EMU (July 18, 2016). Available at SSRN: https://ssrn.com/abstract=2811078 or http://dx.doi.org/10.2139/ssrn.2811078

Rainer Masera (Contact Author)

Università degli Studi Guglielmo Marconi ( email )

Via Plinio 44
Rome, Rome 00193
Italy
+39 06 377251 (Phone)

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