ifo DICE Report 3/2018 (Autumn): Euro Sustainability

Section: Forum – Euro Sustainability

The Euro crisis has disappeared from newspaper front pages. Many experts would agree that some structural problems that caused the crisis and economic imbalances persist, and that economic shocks might cause the crisis to return. But major changes in the regulatory framework and the strong commitment of the European Central Bank make it clear that the Eurozone will deal with economic challenges.

This commitment and the institutional precautions taken are powerless, however, if one or several countries in Europe make a purely political decision. Extremist electoral outcomes may trigger such an exit or disintegration, probably with a small probability, but with one that is different from zero. The conference entitled: “Is the Euro sustainable – and what if not,” held on March 14, 2018 and jointly organized by ESMT Berlin and the Max Planck Institute for Tax Law and Public Finance, aimed to gain insights into possible political worst-case scenarios. The fallout of an exit, or the disintegration of the Eurozone, may be huge. But does this mean that we are not supposed to study what could and should be done if this were to happen? Isn’t it the duty of scientists to study such a scenario, and a serious omission if such research is neglected? We need to know what such events imply, and what needs to be done should they occur.

The ifo DICE Report presents in its 3/2018 issue article based on presentation at conference “Is the Euro sustainable – and what if not”.