Robert Guttmann and Dominique Plihon have put together an extraordinarily comprehensive analysis of Europe's single-currency project. Even if I had some expertise in the subject, I suspect that I would not have many criticisms. Instead, I would like to raise a few of questions because the paper whetted my appetite for more information.
First of all, the paper tells us about the project from the perspective of the people who were in power to make the decisions that led up to the final arrangement. According to Thomas Sargent:
"The people who set up the euro clearly ... strove to set things up to protect the euro from any adverse consequences ... Indeed, the whole system was designed to force governments to balance their budgets in a present value sense, adjusting appropriately for growth. Indeed, the Maastricht Treaty actually put in fiscal rules that amounted to overkill in the interests of creating a fail-safe system."
The casualties of that overkill are now obvious, but I would have liked to learn more about voices raised against this project from the perspective of class interests.
Sargent went further, proposing that "The euro is basically an artificial gold standard. The fiscal rules in the Maastricht Treaty were designed to make explicit the present-value budget balance that was unspoken under the gold standard."
More at:
http://michaelperelman.wordpress.com/2010/12/30/comments-on-the-eurozone/
-- Michael Perelman Economics Department California State University Chico, CA 95929
530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com