Question

The European economies have been struggling (low output growth rate) in recent years. Many economists argued that the creation of the Monetary Union (i.e., the Euro) was going to be a mistake. Explain how economists came to this conclusion. What do you think Europe could have done differently to avoid its current difficulties?

Answer 1

Answer: Euro zone establish among EU member countries for greater stability ,promote growth and greater integaration in 1999.

There were certain criteria decided , which a country has to follow, being as a member in Euro zone like a definit level of fiscal deficit criteria should not be violated and many more.

But after Italy like countries went into disruptions and faced problem in economies then this very concept of euro zone became problem for such countries.Alligations put on exporting countries for there non cooperation.

Recently The European economies have been struggling (low output growth rate) in recent years and many economist blam euro zone concept for this crisis.

They argue that absence of any perticular exit criteria from euro zone and any possible relaxation in case of crisis led to this problem

Countries like france, Italy and now Germany as well are showing such problems due to low domestic demand , less ecobomic growth, Stagnation in output is a reality coupled with a same currency where if importing coutries will benefit then exporter countries will lose and vice versa.

Euro countries should make a proper exit procedure and add many dynamic criteria to avoid any such crisis.

Hope it helps!