Financial and Monetary Policy Studies 43 NazarộdaCostaCabral JosộRenatoGonỗalves NunoCunhaRodrigues Editors The Euro and the Crisis Perspectives for the Eurozone as a Monetary and Budgetary Union Financial and Monetary Policy Studies Volume 43 Series Editor Ansgar Belke Essen, Germany More information about this series at http://www.springer.com/series/5982 Nazare´ da Costa Cabral • Jose Renato Goncáalves ã Nuno Cunha Rodrigues Editors The Euro and the Crisis Perspectives for the Eurozone as a Monetary and Budgetary Union Editors Nazare´ da Costa Cabral CIDEEFF - School of Law, University of Lisbon Alameda da Universidade Lisbon, Portugal Jose´ Renato Gonc¸alves CIDEEFF - School of Law, University of Lisbon Alameda da Universidade Lisbon, Portugal Nuno Cunha Rodrigues CIDEEFF - School of Law, University of Lisbon Alameda da Universidade Lisbon, Portugal ISSN 0921-8580 ISSN 2197-1889 (electronic) Financial and Monetary Policy Studies ISBN 978-3-319-45709-3 ISBN 978-3-319-45710-9 (eBook) DOI 10.1007/978-3-319-45710-9 Library of Congress Control Number: 2016960545 © Springer International Publishing Switzerland 2017 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer International Publishing AG Switzerland Acknowledgements The editors are grateful to the leading scholars and experts in European affairs who have contributed to the chapters and to CIDEEFF’s language reviewer, Professor David Hardisty (Leitor, Universidade Nova de Lisboa), who also provided comments on several chapters of the Book The editors wish to thank to Marta Caldas, CIDEEFF/PhD Researcher, for her invaluable organizational work and scientific support to this project v Contents Overview Nazare´ da Costa Cabral, Jose´ Renato Gonc¸alves, and Nuno Cunha Rodrigues Part I The Eurozone as a (non) Optimum Currency Area The Fundamental Flaws in the Euro Zone Framework Joseph E Stiglitz 11 EMU as a Sustainable Currency Area Annette Bongardt and Francisco Torres 17 A Structural-Reform Proposal for a Two-Speed European Monetary Union Sergio Rossi Are Euro Area Economic Structures Changing? Francesco Paolo Mongelli, Georgios Papadopoulos, and Elisa Reinhold Differences in Human Capital and Openness to Trade as Barriers to Growth and Convergence in the EU Marta C.N Simo˜es, Jo~ao A.S Andrade, and Adelaide P.S Duarte Has the Euro Any Future Under Secular Stagnation? Francisco Louc¸~a Part II 33 47 73 95 A Monetary Union Relying on Fiscal Policy Coordination: Achievements, Shortcomings and Future Perspectives European Monetary Union: Political Motivation 111 Luı´s Ma´ximo dos Santos vii viii Contents The Great Recession of 2012–2014: The Monetary Union Challenged by National Egoisms 125 Pierre-Alain Muet The Fiscal Compact and the Excessive Deficit Procedure: Relics of Bygone Times? 131 Ansgar Belke A Conceptual Framework for Reforms Versus Debt in the Context of a Fiscal Union Within the European Monetary Union 153 Yannis M Ioannides Sovereign Debt Restructuring in a Monetary Union: The Case of the Euro Area Member States 173 Se´rgio Gonc¸alves Cabo Part III New Perspectives for Macroeconomic Stabilizers in the European Union The Crisis Management of the ECB 199 Fritz Breuss The Unconventional Monetary Policy of the ECB and the International Economic and Financial Crisis: Effectiveness Versus Exhaustion 223 Anto´nio Mendonc¸a The Eurozone’s Private and Governmental Shock Absorbers: Current Setup and Future Prospects 249 Nazare´ de Costa Cabral The European Banking Union and the Economic and Monetary Union: The Puzzle Is Yet to Be Completed 271 Nuno Cunha Rodrigues and Jose´ Renato Gonc¸alves The (Future) European Unemployment Insurance and Its Role as an Automatic Stabiliser 289 Miroslav Beblavy´, Karolien Lenaerts, and Ilaria Maselli Part IV A Budgetary Union as a Way-out of the EMU Crisis: Is It Possible? Achieving Accountable Governance and Structural Reforms: Lessons from the Crisis in Europe 305 Ehtisham Ahmad and Giorgio Brosio The Financing of the European Union Budget 325 Herman Matthijs Contents ix Toward a Closer Union in Europe: Elusive Mirage or Reality Within Grasp? 339 George Kopits The Scope for a Budgetary Union in the European Monetary Union 357 Oscar Bajo-Rubio and Carmen Dı´az-Rolda´n About the Editors and Authors Syed Ehtisham Ahmad is Senior Fellow at the Center for Development Research at the University of Bonn and at the LSE (since 2010); member of Academic Committee, Institute of State Governance, Sun Yat-Sen University, Guangzhou, PR China (since 2015); and Pao Yu-Kong Professor at Zhejiang University, PR China (since 2016) At the IMF during 1990–2010, Dr Ahmad has been Senior Advisor at the Executive Board; Advisor and Division Chief, Fiscal Affairs Department; and Special Advisor to the Finance Minister, Saudi Arabia, 1996–1998 (on leave from the IMF) He was on the World Bank staff team for the 1990 World Development Report “Poverty”; Director of the Development Economics Research Programme, STICERD, LSE (1986–1990); and Deputy Director of the Development Economics Research Center at Warwick University (1980–1986) He has written widely on public policy and fiscal reforms, governance, fiscal federalism, and poverty reduction His recent books include Multi-level Finance and the Crisis in Europe, Elgar 2016 (with Giorgio Brosio and Massimo Bordignon); Handbook of Multilevel Finance, Elgar 2015; Handbook of Fiscal Federalism, Elgar 2006; and Does Decentralization Enhance Service Delivery and Poverty Reduction? Edward Elgar 2009 (with Giorgio Brosio) Some earlier books include Theory and Practice of Tax Reform in Developing Countries, CUO 1991 (with Nicholas Stern); Social Security in Developing Countries, OUP 1992 (with Jean Dre`ze, John Hills, and Amartya Sen; Reforming China’s Public Finances, IMF, 1995 (with Gao Qiang and Vito Tanzi); Financing Decentralized Expenditures—A Focus on Intergovernmental Grants, Edward Elgar 1997; and Managing Fiscal Decentralization, Routledge 2002 (with Vito Tanzi) Jo~ ao Sousa Andrade is Full Professor at the Faculty of Economics of the University of Coimbra and a researcher affiliated with the Group for Monetary and Financial Studies (GEMF) He has a Doctoratd’E´tat en Sciences E´conomiques He is PhD Professor and PhD supervisor in the fields of Macroeconomics and xi ... interests are in macroeconomic analysis, particularly as regards national as well as international monetary and financial issues He has authored and edited many books, contributed several chapters... Bahia and the Federal University of Paraı´ba (Brazil), University AgostinhoNeto (Angola, Lubango Centre and Benguela Centre), and the new University ManduneYaNdemufayo (AngolaLubango) Several teaching... Money, and Monetary Policy He serves as a reviewer for several international ISI and Scopius publications He has participated in several international research and teaching programmes and was invited