European Imbalances: The Sound and the Fury

Abstract

As in the novel by William Faulkner, the perspective which is chosen to tell a story or, here, to explain a broad crisis matters a lot. The European crisis is no exception. Different views can explain the growing imbalances in the Eurozone, from the fiscal view to the labour market view. In this chapter, I critically review these separate explanations and highlight the necessity to gather the pieces to understand the full story. So doing, I can discuss the recent reforms (aggregate fiscal stance, productivity boards), the current agenda of reforms (e.g. Eurozone budget) and alternative proposals to enhance Eurozone governance, integration, and future development.