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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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Europe’s New German Problem

Europe’s New German Problem

The Timing of Politics and the Politics of Timing

(p.187) 9 Europe’s New German Problem
The Future of the Euro

Wade Jacoby

Oxford University Press

This chapter adds an electoral and federal dimension to Germany’s euro crisis response that allows us to project future German policy by considering two distinct worlds. In the first world, where the “timing of politics” matters, German policymakers accept the need to act, but they want to pick the optimal time of intervention to maximize the efforts of private actors to deter moral hazard. In the second world, where “politics of timing” matters, German elites feel they cannot intervene until they have properly prepared their voters. These two worlds operate simultaneously, with the result that if one lives in the first world, patience is a virtue: elites should wait and minimize moral hazard. If one lives in the second world, patience is a vice: windows of opportunity for stemming the crisis slam shut. Living in both worlds at the same time leads to weak and inconsistent policy.

Keywords:   Germany, moral hazard, legitimacy, federalism, euro crisis

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