Panic-driven austerity in the Eurozone and its implications

2013-02-21article82 citationsclosed

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European Monetary and Fiscal Policies Fiscal Policies and Political Economy European Socioeconomic and Political Studies

Abstract

Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious that austerity produces unnecessary suffering, millions may seek liberation from ‘euro shackles’.

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References

2012Self-fulfilling crises in the Eurozone: An empirical test

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