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The Euro Crisis and Its Aftermath$
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Jean Pisani-Ferry

Print publication date: 2014

Print ISBN-13: 9780199993338

Published to Oxford Scholarship Online: May 2014

DOI: 10.1093/acprof:oso/9780199993338.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 12 May 2021

Germany’s Long Penance

Germany’s Long Penance

(p.47) Chapter 6 Germany’s Long Penance
The Euro Crisis and Its Aftermath

Jean Pisani-Ferry

Oxford University Press

Given Germany’s current prosperity, it is easy to forget that it was in much poorer when the euro came into force. Whereas countries such as France, Italy, and Spain had a remarkably easy journey during the first years of the euro, Germany started with a significant handicap following reunification that took almost ten years to remedy through structural reform, wage moderation and a deep restructuring of German industry. Germany’s efforts were not without consequences for other Eurozone countries: it led the European Central Bank (ECB) to keep interest rates at levels that were too low for Spain, Greece, and others, helping to fuel inflation and credit bubbles. This powerful and self-perpetuating dynamic was allowed to go on for far too long, until the crisis broke.

Keywords:   Germany, euro, France, European Central Bank, monetary policy, interest rates, Spain, Greece, inflation

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