Stuck on the wrong track: 20 years of euro disillusion, denial, and delusion*

Abstract

This contribution assesses the functioning of Europe's Economic and Monetary Union (EMU) during the first 20 years of the euro's existence. It argues that two formative intellectual currents converged at Maastricht to shape the design and reception of the euro regime: ordoliberalism and neoliberalism. Germany's ordoliberalism inspired and shaped the euro regime design. Neoliberalism fashioned the reception of what was agreed at Maastricht under the influence of Bundesbank dogma and power. As a product of the zeitgeist, Europe got stuck with a deeply flawed euro regime. The Maastricht Treaty institutionalized an asymmetric (growth-unfriendly) policy regime. This suited the macroeconomic mainstream well, fighting the ‘1970s stagflation war’ for the past 40 years. Twenty years of euro disillusion have produced the exact opposite: ‘stagdeflation.’

Book review: Heine, Michael and Hansjörg Herr (2021): The European Central Bank, Newcastle upon Tyne, UK (208 pages, Agenda Publishing, hardcover, ISBN 978-1-78821-294-6; softcover, ISBN 978-1-78821-295-3; ebook, ISBN 978-1-78821-296-0)

“…Heine, Michael and Hansjörg Herr (2021): The European Central Bank, Newcastle upon Tyne, UK (208 pages,Agenda Publishing,hardcover,softcover,ebook, Torsten Niechoj Rhine-Waal University of Applied Sciences, Kamp-Lintfort, Germany and FMM Fellow In 2020, EJEEP published a special issue on 'The euro at 20macroeconomic challenges' with contributions by Bénassy-Quéré (2020), Bibow (2020), Zezza (2020), Bofinger (2020) and Constâncio (2020), who critically reviewed the establishment, evolution and current state of the euro area. The monograph at hand by Michael Heine and Hansjörg Herr offers a rich fundus of institutional, empirical and analytical information in historical perspective that is necessary to understand such debates on monetary policies in the euro area.…”