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These models and simulations have been tagged “Policy-Failure”.
Eurozone members have given up their national currencies and adopted the Euro. In doing so they have forfeited their fiscal spending capacity to manage their economies and respond effectively to external shocks. Austerity in the face of economic downturns is not a choices for Eurozone members, but a necessity. The Euro as a 'stateless' currency does not make any sense, because it cannot be employed to pursue countercyclical policies, a primary and necessary policy instrument of modern democratic governments. The CLD shows how the pernicious dynamic that arises from these misguided policies leads social discontent and instability. The faulty design of the Euro will prevent the EU from fulfilling its promise to improve the lives of EU citizens and in this sense the Euro has already failed as a common currency.
The Dynamic that Threatens the Stability of the Euro