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5 - The Great Recession

How It Developed in Europe

from Part II - Institutions and Policies in Action

Published online by Cambridge University Press:  19 August 2020

Nicola Acocella
Affiliation:
Sapienza Università di Roma
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Summary

Chapter 5 investigates the consequences of the Great Recession on indicators of macroeconomic and microeconomic efficiency and equity. In Europe the financial crisis appeared initially under forms similar to those characterizing the United States, but soon assumed a very different form, due to the state intervention to save ailing banks, and the EMU peculiar institutions. More recently, the crisis has again changed its nature, as sovereign debt has been absorbed by banks, thus causing a problem for them and, in turn, again for the public finances that had to face bank failures. An important role was played by the specific financial imbalances that appeared in the EMU as a consequence of the formation of a currency area. Pre-existing imbalances became more intense when Germany decided to cope with the difficulties of a mature economy and unification with its Eastern Lander by adopting an export-led growth model supported by real devaluation. Then, European financial integration allowed for persistent net lending from core countries to peripheral countries, which compensated for the current account of the latter towards not only the former but also countries external to the EA.

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Chapter
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The European Monetary Union
Europe at the Crossroads
, pp. 142 - 184
Publisher: Cambridge University Press
Print publication year: 2020

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  • The Great Recession
  • Nicola Acocella, Sapienza Università di Roma
  • Book: The European Monetary Union
  • Online publication: 19 August 2020
  • Chapter DOI: https://doi.org/10.1017/9781108892858.006
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  • The Great Recession
  • Nicola Acocella, Sapienza Università di Roma
  • Book: The European Monetary Union
  • Online publication: 19 August 2020
  • Chapter DOI: https://doi.org/10.1017/9781108892858.006
Available formats
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To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • The Great Recession
  • Nicola Acocella, Sapienza Università di Roma
  • Book: The European Monetary Union
  • Online publication: 19 August 2020
  • Chapter DOI: https://doi.org/10.1017/9781108892858.006
Available formats
×