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The Economists’ Voice

Ed. by Belke, Ansgar / Schnabl, Gunther

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Core-Periphery Relations in the Eurozone

Paul De Grauwe / Yuemei Ji
  • University College London School of Slavonic and East European Studies, London, United Kingdom
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2018-11-21 | DOI: https://doi.org/10.1515/ev-2018-0027

Abstract

We argue that the case for the existence of some deterministic force that condemns countries in the periphery to stay in the periphery indefinitely, is weak. Countries that are in the periphery today can become part of the core and vice versa. We also argue that the long run success of the Eurozone depends on a continuing process of political unification. Political unification is needed because the Eurozone has dramatically weakened the power and legitimacy of nation states without creating a nation at the European level. This is particularly true in the field of stabilization. The political willingness to go in this direction, however, is non-existent today. There is no willingness to provide a common insurance mechanism that would put taxpayers in one country at risk of having to transfer money to other countries. Under those conditions the sovereign bond markets in the Eurozone will continue to be prone to instability.

Keywords: budgetary union; core-periphery; Eurozone; monetary union; sovereign bond markets

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About the article

Published Online: 2018-11-21


Citation Information: The Economists’ Voice, 20180027, ISSN (Online) 1553-3832, DOI: https://doi.org/10.1515/ev-2018-0027.

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