Working Paper: NBER ID: w19122
Authors: Enrico Spolaore
Abstract: Europe's monetary union is part of a broader process of integration that started in the aftermath of World War II. In this "political guide for economists" we look at the creation of the euro within the bigger picture of European integration. How and why were European institutions established? What are the goals and determinants of European Integration? What is European integration really about? We address these questions from a political-economy perspective, building on ideas and results from the economic literature on the formation of states and political unions. Specifically, we look at the motivations, assumptions, and limitations of the European strategy, initiated by Jean Monnet and his collaborators, of partially integrating policy functions in a few areas, with the expectation that more integration will follow in other areas, in a sort of chain reaction towards an "ever-closer union." The euro with its current problems is a child of that strategy and its limits.
Keywords: No keywords provided
JEL Codes: F15; F50; F55; H40; H77; N44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| strategy of partial integration (F12) | establishment of the euro (F36) |
| failures to form a European federation (F55) | tradeoff between costs and benefits of political integration (F55) |
| political and economic crises in the euro area (H12) | calls for deeper integration (F15) |