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The Euro and the Battle of Ideas
— —
Markus K. Brunnermeier Harold James
The Euro and the Battle of Ideas by Markus K. Brunnermeier at Abbey's Bookshop,

The Euro and the Battle of Ideas

Markus K. Brunnermeier Harold James Jean-Pierre Landau


Princeton University Pres

Business & Economics;
Monetary economics;
International economics


448 pages

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Why is Europe's great monetary endeavor, 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. In this book, Markus Brunnermeier, Harold James, and Jean-Pierre Landau argue that the core problem with the Euro lies in the philosophical differences between the founding countries of the Eurozone, particularly Germany and France. But the authors also show how these seemingly incompatible differences can be reconciled to ensure Europe’s survival.

As the authors demonstrate, 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 authors discuss how 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.

Weaving together economic analysis and historical reflection, The Euro and the Battle of Ideas provides a forensic investigation and a road map for Europe’s future.

By:   Markus K. Brunnermeier, Harold James, Jean-Pierre Landau
Imprint:   Princeton University Pres
Country of Publication:   United States
Dimensions:   Height: 235mm,  Width: 155mm, 
ISBN:   9780691178417
ISBN 10:   0691178410
Pages:   448
Publication Date:   September 2018
Audience:   College/higher education ,  A / AS level ,  Further / Higher Education
Format:   Paperback
Publisher's Status:   Unspecified

1 Introduction 1PART I: POWER SHIFTS AND GERMAN-FRENCH DIFFERENCES2 Power Shifts 17Lethargy of European Institutions 18The First Power Shift: From Brussels to National Capitals 20The Second Power Shift: To Berlin-Paris and Ultimately to Berlin 27After the Power Shift 333 Historical Roots of German-French Differences 40Cultural Differences 41Federalism versus Centralism 43Mittelstand versus National Champions 48Collaborative versus Confrontational Labor Unions 51Historical Inflation Experiences 544 German-French Differences in Economic Philosophies 56Fluid Traditions: Switch to Opposites 56German Economic Tradition 59French Economic Tradition 67International Economics 74PART II: MONETARY AND FISCAL STABILITY: THE GHOST OF MAASTRICHT5 Rules, Flexibility, Credibility, and Commitment 85Time-Inconsistency: Ex Ante versus Ex Post 86External Commitments: Currency Pegs, Unions, and the Gold Standard 89Internal Commitments: Reputation and Institutional Design 91Managing Current versus Avoiding Future Crisis 946 Liability versus Solidarity: No-Bailout Clause and Fiscal Union 97The No-Bailout Clause 98Fiscal Unions 100Eurobonds 111Policy Recommendations 1157 Solvency versus Liquidity 116Buildup of Imbalances and the Naked Swimmer 117Solvency 118Liquidity 119Crossing the Rubicon via Default 125Sovereign-Debt Restructuring and Insolvency Mechanism 126Fiscal Push: Increasing Scale and Scope of EFSF and ESM 127 Monetary Push 131Policy Recommendations 1338 Austerity versus Stimulus 135The Fiscal Multiplier Debate 137The Output Gap versus Unsustainable Booms Debate 143Politics Connects Structural Reforms and Austerity 145The European Policy Debate on Austerity versus Stimulus 148Lessons and Policy Recommendations 153PART III: FINANCIAL STABILITY: MAASTRICHT'S STEPCHILD9 The Role of the Financial Sector 157Traditional Banking 159Modern Banking and Capital Markets 162Cross-Border Capital Flows and the Interbank Market 16610 Financial Crises: Mechanisms and Management 173Financial Crisis Mechanisms 175Crisis Management: Monetary Policy 185Crisis Management: Fiscal Policy and Regulatory Measures 194Ex Ante Policy: Preventing a Crisis 20611 Banking Union, European Safe Bonds, and Exit Risk 210Banking in a Currency Union 211Safe Assets: Flight-to-Safety Cross-Border Capital Flows 222Redenomination and Exit Risks 226Policy Recommendations 233PART IV: OTHERS' PERSPECTIVES12 Italy 237Battling Economic Philosophies within Italy 237Mezzogiorno: Convergence or Divergence within a Transfer Union 239Italy's Economic Challenges 242Politics and Decline 24513 Anglo-American Economics and Global Perspectives 249Diverging Traditions 251The Politics of Looking for Recovery: The United States 261The Politics of Thinking Outside Europe: The United Kingdom 267The Global Perspectives: China and Russia 279Conclusion 28614 The International Monetary Fund (IMF) 287The IMF's Philosophy and Crisis Management 289The IMF's Initial Involvement in the Euro Crisis 295The IMF and the Troika 300A Change in the IMF's Leadership 304Loss of Credibility: Muddling Through, Delayed Greek PSI 30615 European Central Bank (ECB) 313The ECB before the Crisis: Institutional Design and Philosophy 315The ECB's Early Successes and Defeats 325The ECB and Conditionality 331Lending and Asset Purchase Programs 343Single Supervisory Mechanism (SSM) for European Banks 368Taking Stock: Where Does the ECB Stand? 37216 Conclusion: Black and White or Twenty-Eight Shades of Gray? 375Acknowledgments 391Notes 393Index 427

Markus K. Brunnermeier is the Edwards S. Sanford Professor of Economics at Princeton University and Director of Princeton's Bendheim Center of Finance. Harold James is professor of history and international affairs and the Claude and Lore Kelly Professor of European Studies at Princeton University. Jean-Pierre Landau is former deputy governor of the Banque de France and associate professor of economics at Sciences Po in Paris.

An exhaustive and original coverage of the working and difficulties of the euro zone in recent decades. . . . This book is worth reading. It mixes in a thorough way general concepts, economic facts and theories, as well as significant factual episodes in the recent economic and political history of the euro zone. --Jean-Christophe Poutineau, Economic Record Winner of the 2017 Gold Medal in International Business / Globalization, Axiom Business Book Awards One of Bloomberg's Best Books of 2017 One of Project Syndicate's Best Reads in 2017 (chosen by Jean Pisani-Ferry) One of The Economist's Economics and Business Books of the Year 2016 One of Financial Times ( Best Economics Books of 2016 One of Bloomberg's Best Books of 2016 A book of depth and subtlety that is helpful in understanding matters well outside the questions it seems to address.... This is a fascinating and informative book. --Geoffrey Wood, Central Banking Journal Markus Brunnermeier, Harold James and Jean-Pierre Landau have just published a fascinating book, The Euro and the Battle of Ideas, in which they bring together their respective skills in economic theory, economic history and economic policy to bear on one of the most important macroeconomic problems of our times--the rules versus discretion debate. Anyone who has studied this debate--and that's just about anyone who has taken a course in economics--would benefit from reading this book. --Economics One bog [The Euro and the Battle of Ideas] demonstrates the value of sophisticated syntheses of policy analysis and intellectual history. --Foreign Affairs [The authors] have the advantage of being deeply involved. . . . If Europe is high on your list of concerns, you should read this book; European leaders will. --David Warsh, Economic Principals In The Euro and the Battle of Ideas, the economists Markus Brunnermeier, Harold James, and Jean-Pierre Landau turn a sharp lens on the basic divide between France and Germany. --Rana Foroohar, New York Review of Books If we turn to The Euro and the Battle of Ideas by Markus K. Brunnermeier, Harold James, and Jean-Pierre Landau, we start to find an explanation. The three authors are, respectively, a German academic economist, an English economic historian, and a French banker turned economics professor, and their book is an attempt to explain the euro's ideological and historic background. They explore the dichotomy between French and German political-economic philosophies. The first values flexibility and solidarity and state intervention; the second stresses rules and consequences and free markets. --John Lanchester, New Yorker

  • Short-listed for Financial Times ( Best Economics Books of 2016 2016
  • Short-listed for The Economist 's Economics and Business Books of the Year 2016 2016
  • Short-listed for Bloomberg's Best Books of 2016 2016
  • Short-listed for Bloomberg's Best Books of 2017 2017
  • Short-listed for Project Syndicate's Best Reads in 2017 (chosen by Jean Pisani-Ferry) 2017
  • Winner of 2017 Gold Medal in International Business / Globalization, Axiom Business Book Awards 2017
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