Debate on the Eurozone; 3 Questions!

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Politics
Debates

Form Your Opinion is launching it's first online debate! With the support of the European Institute of the University College London, this debate is part of a broader project which aims to advance a multi disciplinary discussion over the European Monetary Union and economic governance. Three main discussion groups are formed looking at: the democratic deficit in the EMU,  issues of fiscal policy, the problems caused by a common monetary policy.

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As the crisis hits the EMU’s periphery harder, the current counter-inflationary policy of the ECB is becoming harder to justify politically. The public feels it is bitterly bearing the actions of the Institution.  Though it is highly unlikely that Member States will break away from the Eurozone for this reason, a solution is needed. Could the ECB lose its independence? What would the likely scenarios be bearing in mind the divide of opinion within the EMU?

Many of the eurozone’s peripheral economies are now forced to implement strong austerity measures. Moreover, even if the southern countries succeeded in stabilising their budgets and debt levels, none of the underlying problems that caused the crisis are being solved. Is there a sensible way in which transnational fiscal policy, structural funds or even industrial policy could be used to close the productivity gaps between the core and periphery and to rein in asymmetric inflation pressures within the monetary union?

The decision of the ECB to raise key interest rates by 25 basis points to 1.25% following its April meeting prompted criticism from economists who saw the move as damaging to the Eurozone’s periphery and/or too timid to address rising inflation in the core. It seems safe to say, then, that the ‘one-size-fits-all’ monetary policy of the ECB is more nearly ‘one-size-fits-none’ at this point. Should the ECB focus less on discrete price changes and more on inflation inertia? Should the average inflation be weighted differently than it currently is? Should the bank have a dual-mandate (price stability and full-employment)?

We look forward to leading stimulating discussions and welcome students and faculty from all backgrounds. Whether you consider yourself an expert on EMU or would like to contribute your perspective from an unrelated background, we hope you will join us online or in person to make this an informative and dynamic debate. For more information on the project: http://www.ucl.ac.uk/european-institute/post_doc_forum

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