The existential crisis of the Eurozone is likely to return to the centre of the European policy debate. The question today is not simply whether the EMU will survive or collapse, but whether the growth performance can improve without actual reform (e.g. Buti and Rodríguez Muñoz 2016).
Since its inception, and already before the crisis, the Eurozone has had lower growth and higher unemployment rates than other regions in the world. The reason for this outcome is to be found in the ‘Maastricht model’ (Andor 2013) flawed by two key structural weaknesses: a tendency to develop imbalances, and an inherent deflationary bias (Pasimeni 2015). The trade-off between growth with imbalances or balance without growth signals a clear stabilisation problem.
