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The Future of the Euro$
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Matthias Matthijs and Mark Blyth

Print publication date: 2015

Print ISBN-13: 9780190233235

Published to Oxford Scholarship Online: March 2015

DOI: 10.1093/acprof:oso/9780190233235.001.0001

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The Troubled Southern Periphery

The Troubled Southern Periphery

The Euro Experience in Italy and Spain

(p.161) 8 The Troubled Southern Periphery
The Future of the Euro

Jonathan Hopkin

Oxford University Press

This chapter argues that the fate of the euro hangs on the outcome of the crisis in the southern European democracies. Moving beyond the standard narrative of debtor and creditor nations, it examines the political and distributional consequences of EMU within the “big two” southern member states, Italy and Spain. The chapter demonstrates how the euro brought big gains to the sheltered, non-tradable sectors of the economy, while manufacturing workers saw wages stagnate. The policies imposed on the South in response to the crisis, however, have come down hard on unionized workers and other lower income groups, while protecting the politically powerful lobbies that gained during the boom. Southern Europeans have shown remarkable resilience during the crisis, but the imposition of austerity and reform constitutes a major natural experiment with high stakes: it counts on southern European citizens maintaining their unwavering commitment to the euro to justify years of sacrifice.

Keywords:   Italy, Spain, austerity, non-tradable sector, manufacturing, southern Europe, euro

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