Why is the Euro in Trouble?
Harold James, Claude and Lore Kelly Professor, European Studies, Princeton University
Chair: Paola Subacchi, Director, International Economics Department, Chatham House
Why is Europe's great monetary endeavour, the euro, in trouble? A string of economic difficulties in Greece, Ireland, Spain, Italy, and other eurozone nations has left observers wondering whether the currency union can survive. The new book by Markus Brunnermeier, Harold James and Jean-Pierre Landau, The Euro and the Battle of Idea, argues that the core problem with the euro lies in the philosophical differences between the founding countries of the eurozone, particularly Germany and France.
Harold James will discuss the well-received book and how these seemingly incompatible differences can be reconciled to ensure Europe’s survival. Germany, a federal state with strong regional governments, saw the Maastricht Treaty, the framework for the euro, as a set of rules. France, on the other hand, with a more centralized system of government, saw the framework as flexible, to be overseen by governments. The troubles faced by the euro have led its member states to focus on national, as opposed to collective, responses, a reaction explained by the resurgence of the battle of economic ideas: rules vs discretion, liability vs solidarity, solvency vs liquidity, austerity vs stimulus.
The event will be a part of the International Economics Department’s ‘New Thinking in Economics’ Writers’ roundtable series, where distinguished, innovative authors and commentators writing on international economic topics are invited to discuss their most recent work.