October 14th, 2015
in Op Ed
by Dirk Ehnts, Econoblog101
The ongoing economic problems in the euro zone have led to more and more economists coming out in favour of significant reform or dissolution. Rolf Weder at Ökonomenstimme argues for an alternative, while public radio Deutschlandfunk reports that the German media reports views of Berlin and Brussels as objective truths without alternative.
The abstract reads of a paper by Andrew Rose from 2006 with the title "Checking Out: Exits from Currency Unions":
This paper studies the characteristics of departures from monetary unions. During the post-war period, almost seventy distinct countries or territories have left a currency union, while over sixty have remained continuously in currency unions. I compare countries leaving currency unions to those remaining within them, and find that leavers tend to be larger, richer, and more democratic; they also tend to have higher inflation. However, there are typically no sharp macroeconomic movements before, during, or after exits.
There is an alternative. I am not saying that it is the better option, but the euro as is cannot survive the next recession without significant policy changes. One might as well be prepared to give a new role to fiscal policy and forget monetary policy. Everybody except a few but powerful German economists seem to understand that.