Working Paper: CEPR ID: DP10559
Authors: Luigi Guiso; Paola Sapienza; Luigi Zingales
Abstract: Entering a currency union without any political union European countries have taken a gamble: will the needs of the currency union force a political integration (as anticipated by Monnet) or will the tensions create a backlash, as suggested by Kaldor, Friedman and many others? We try to answer this question by analyzing the cross sectional and time series variation in pro-European sentiments in the EU 15 countries. The 1992 Maastricht Treaty seems to have reduced the pro-Europe sentiment as does the 2010 Eurozone crisis. Yet, in spite of the worst recession in recent history, the Europeans still support the common currency. Europe seems trapped: there is no desire to go backward, no interest in going forward, but it is economically unsustainable to stay still.
Keywords: Euro; Euro crisis; European Union
JEL Codes: E42; F45
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Maastricht Treaty (F15) | drop in support for European membership (F55) |
| Eurozone crisis (H12) | negative impact on support for the EU (F69) |
| unemployment rates (J64) | lower support for EU membership (F55) |
| national debt levels (H63) | discontent towards Europe (F01) |
| economic crises (G01) | desire for reforms (O17) |
| economic crises (G01) | diminished support for further integration (F55) |
| deterioration in support for Europe (F01) | unfavorable economic conditions (E66) |