Crisis Cycle : Challenges, Evolution, and Future of the Euro.

Format:

Book

Author/Creator:

Cochrane, John H.

Contributor:

Garicano, Luis.

Masuch, Klaus.

Language:

English

Subjects (All):

Euro.

Financial crises--Europe.

Financial crises.

Europe--Economic conditions--1945-.

Europe.

Genre:

Electronic books.

Physical Description:

1 online resource (289 pages)

Edition:

1st ed.

Place of Publication:

Princeton : Princeton University Press, 2025.

Summary:

"How the euro survived a series of crises, and how to make it more resilient. The euro has survived crises unimagined at its founding: the financial meltdown of 2007-2009, the sovereign debt crisis of 2010-2012, the pandemic, and the Russian invasion of Ukraine. The European Central Bank fought these crises with dramatic policy innovations, buying up vast amounts of debt and providing large loans to banks. But now everyone expects the ECB to intervene routinely, and the euro is more fragile as a result. Crisis Cycle recounts this history and offers recommendations for restoring a durable monetary union.Monetary and fiscal policy are intertwined, especially in a currency union like the eurozone. Member states can be tempted to borrow and spend too much, and then count on the ECB to rescue them by printing money to buy their bonds. To avoid these disincentives, the ECB was founded with a narrow mandate: use interest rates to pursue price stability, and don't buy sovereign debt. Debt and deficit rules would keep countries from getting into trouble.The ECB's emergency innovations brought back these disincentives. How can the EU avoid larger and larger bailouts? The authors argue that Europe needs a joint fiscal institution that can provide temporary help to sovereigns, a resolution mechanism so sovereign default is a motivating possibility, and bank reform that ensures sovereign default will not bring down the financial system. This timely book shows how to restore the euro's ambitious and effective founding framework. The unique group of authors combine extensive policy experience and authoritative academic credentials"-- Provided by publisher.

"A four-part history of the euro-and how to strengthen it"-- Provided by publisher.

Contents:

Cover

Contents

Preface

1. Introduction and Overview

1.1. A Founding Architecture

1.2. Erosion in Successive Crises

1.3. Reform

1.4. Other Voices

2. Key Economic Ideas

2.1. Monetary-Fiscal Interaction

2.2. Time Consistency and Commitment

2.3. Self-Fulfilling Crises

2.4. Central Bank Independence and Mandates

2.5. Tax Smoothing and State-Contingent Default

2.6. Lender of Last Resort and Financial Crises

2.7. Monetary Union

3. The Design of the Economic and Monetary Union

3.1. The Triple Lock

3.2. A Missing Piece

3.3. Monetary Union without Banking Union

3.4. Monetary Union without Fiscal Union Is Feasible

3.5. The European Central Bank

3.6. The Institutional Structure of the ECB

3.7. Balance of Payments and the ECB

3.8. Summary

4. Prelude to Financial Crisis

4.1. Debt and Deficits

4.2. Peripheral Debt and Trade Flows

4.3. Fragile Banks

4.4. Banking Crises

4.5. Policy Responses

5. The Sovereign Debt Crisis

5.1. Greece

5.2. Ireland

5.3. Portugal

5.4. Spain

5.5. Italy

5.6. Cyprus

5.7. Lessons

5.8. The ECB's Securities Market Program

5.9. Whatever It Takes

5.10. Outright Monetary Transactions

6. Institutional Reforms

6.1. Fiscal Rules

6.2. The European Stability Mechanism, Conditionality, and the Troika

6.3. Banking Reforms

7. The Zero Bound

7.1. Asset Purchases (Quantitative Easing)

7.2. Subsidized Loans to Banks

7.3. 2016-2019: Low Inflation Continues

8. The Pandemic

8.1. Monetary Response

8.2. Fiscal Response

9. Inflation, War, and Tightening

9.1. Inflation Returns

9.2. The Monetary Policy Response

9.3. Inflation's Surge and Easing: Sources and Lessons

9.4. Easing Inflation, and Synthesis

9.5. The Transmission Protection Instrument and Flexible Purchases.

10. The Unsustainable Present

10.1. Unsustainable Fiscal Policy

10.2. Lack of Structural Reforms and Growth

10.3. Reform Paralysis

10.4. Balance Sheet and Market Footprint

10.5. The ECB and the Balance of Payments

11. Reform Proposals

11.1. A European Fiscal Institution

11.2. European Bonds

11.3. ECB Lending: Banks and Target2

11.4. Restructuring

11.5. Sovereign Debt

11.6. Breaking the Sovereign-Bank Nexus

11.7. Emergency Liquidity Assistance and Money Creation

11.8. Monetary Policy

11.9. Political Feasibility

Notes

Bibliography

Index.

Notes:

Includes bibliographical references and index.

Description based on publisher supplied metadata and other sources.

ISBN:

0-691-27161-5

OCLC:

1517395959