Correcting for the Eurozone Design Failures: The Role of the ECB

Abstract:

Macroeconomic policies in the Eurozone have been dysfunctional since the eruption of the financial crisis. The failure of these policies to guide the Eurozone out of the crisis has everything to do with the design failures in the Eurozone. In this article, we first remind the reader of the nature of these design failures. We then analyze how these have led to ill-designed macroeconomic policies. We then focus on the role of the ECB on correcting for these design failures. We conclude with some thoughts about monetary and political unification.