After a successful launch of the Euro and some beneficial years for the countries in the European Monetary Union enjoying low interest rates, the bankruptcy of Lehman Brothers in 2008 triggered a global financial and economic crisis which especially in the European Monetary Union turned into a sovereign debt crisis. Based on the ninth edition of Paul De Grauwe’s book “Economics of Monetary Union”, this paper analyzes Italy’s economic development in the last years and shows the benefits and costs for Italy of being in the European Monetary Union with special regard to Robert Mundell’s theory of optimum currency areas (OCA-theory) (1961), the occurrence of asymmetric tendencies/shocks, their relevance for the country, and the question of overcoming of those shocks.
In the end a clear answer is given if it was a good or a bad decision for Italy and its economy to join the European Monetary Union.
Table of contents
1. Abstract
2. Introduction
2.1 The Research Question
2.2 The Theory of Optimum Currency Areas
2.3 Country Overview
3. Asymmetric tendencies/shocks in Italy
3.1 GDP development
3.2 Competitiveness
3.3 Current Account Balance
3.4 Unemployment
3.5 State budget and indebtedness
3.6 Long-term Interest Rates
4. Sustainability of the current budget deficit shock
5. Ways to overcome the crisis
6. Measures taken to overcome the crisis
7. Conclusion
8. Bibliography
- Citar trabajo
- Raphael Krenke (Autor), 2013, The Economics of European Integration - The Perspective of Italy, Múnich, GRIN Verlag, https://www.grin.com/document/210097
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