The European sovereign debt crisis emerged from a few euro members being stuck with high-deficits and high-indebtedness, and thus is oversimplified to be referred to as the euro debt crisis. It, in fact, consists of several individual crises with different causes. The Greek crisis was a governance crisis that lacks of fiscal disciple by nature; the Irish and Spanish crises were the bubble crisis of the property sector and banking crisis caused by the US sub-prime crisis; the Italian and Portuguese crises involve more structural and long-term growth crisis. Accordingly, the austerity and the fiscal compact that Germany promoted, referring to the reforms of the public sector and the restoration of fiscal disciple, can only offer partial answers to the end of the crisis. The implementation of fiscal discipline and the resolution of the crisis depend on the provision of economic growth and jobs and the establishment of a full-blown fiscal union. With the absence of expansionary fiscal policy and fiscal transfer at the EU level, this paper suggests that the crisis countries should be granted with the maneuver of expanding/contracting government spending according to the changes in growth and jobs. The crisis reveals five characteristics: the centrality of Franco-German axis; the specialty of the Greek case; national governments’ triumph over supranational institutions; the convergence of the EU’s economic governance with the German model; the need to address non-fiscal dimensions.
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