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Learning from mistakes: A ‘what if’ approach to assessing proposals for euro area reform

George Papaconstantinou, (2018), «Learning from mistakes: A ‘what if’ approach to assessing proposals for euro area reform», VoxEU, 21 Ιουνίου

The policy discussion on euro area reform has entered a critical phase, and analytical contributions informing that discussion have become particularly important. Among these, the recent CEPR Policy Insight (Bénassy-Quére et al. 2018) stands out. It is an important contribution to the discussion which the European Commission kicked off institutionally with its own ‘roadmap’ proposals. Reacting to the Policy Insight, together with a number of other economists with diverse academic and policy backgrounds, I co-signed an opinion piece on a “Blueprint for a democratic renewal of the Eurozone” (Andor et al. 2018). These two contributions share a number of common views on the state of affairs and the way forward. The starting point to both is the built-in institutional weaknesses of the euro area and the recognition that these have been only partly addressed to date. And both believe not only that the status quo is not tenable but also that it would be a mistake to settle for marginal changes. Where they differ is in their scope and intent. Bénassy-Quére et al. explicitly attempt to influence the ongoing Franco-German debate on euro area reform by presenting what could constitute an acceptable compromise. Andor et al. (2018) instead sketch out a bolder and broader direction that in the current political climate would seem to be beyond reach.

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