Mauro F. Guillén
- Published in print:
- 2015
- Published Online:
- November 2015
- ISBN:
- 9780199683604
- eISBN:
- 9780191763267
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199683604.003.0006
- Subject:
- Business and Management, Finance, Accounting, and Banking, Organization Studies
As a bloc of 17 EU members, the Euro Zone is one of the most complex and tightly coupled arrangements in the world, linked together by a single currency, a single central bank, and an attempt to ...
More
As a bloc of 17 EU members, the Euro Zone is one of the most complex and tightly coupled arrangements in the world, linked together by a single currency, a single central bank, and an attempt to coordinate macroeconomic, fiscal, and banking policies and regulations. The crisis in the Euro Zone that started in 2009 can be readily explained by reference to its complexity and tight coupling, which were created by the technocratic dream of a truly unified Europe, adopted prematurely in 1999 in order to anchor a united Germany. As opposed to painful and relatively ineffective austerity measures and a renewed drive towards integration, Europe can alleviate unemployment and its relative decline by prioritizing economic growth, which can be more easily achieved if the surplus economies increase wages and consumption, and inflation accelerates slightly.Less
As a bloc of 17 EU members, the Euro Zone is one of the most complex and tightly coupled arrangements in the world, linked together by a single currency, a single central bank, and an attempt to coordinate macroeconomic, fiscal, and banking policies and regulations. The crisis in the Euro Zone that started in 2009 can be readily explained by reference to its complexity and tight coupling, which were created by the technocratic dream of a truly unified Europe, adopted prematurely in 1999 in order to anchor a united Germany. As opposed to painful and relatively ineffective austerity measures and a renewed drive towards integration, Europe can alleviate unemployment and its relative decline by prioritizing economic growth, which can be more easily achieved if the surplus economies increase wages and consumption, and inflation accelerates slightly.
Mauro F. Guillén
- Published in print:
- 2015
- Published Online:
- November 2015
- ISBN:
- 9780199683604
- eISBN:
- 9780191763267
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199683604.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking, Organization Studies
Why are there so many crises in the world? Is it true that the global system is today riskier and more dangerous than in past decades? Do we have any tools at our disposal to bring these problems ...
More
Why are there so many crises in the world? Is it true that the global system is today riskier and more dangerous than in past decades? Do we have any tools at our disposal to bring these problems under control, to reduce the global system’s proneness to instability? These are the tantalizing questions addressed in this book. Using a variety of demographic, economic, financial, social, and political indicators, the book demonstrates that the global system has indeed become an “architecture of collapse” subject to a variety of shocks. An analysis of the global financial crisis of 2008, the bilateral relationship between the U.S. and China, and the European sovereign debt crisis illustrates how the complexity and tight coupling of system components creates a situation of precarious stability and periodic disruption. This state of affairs can only be improved by enhancing the shock-absorbing components of the system, especially the capacity of states and governments to act, and by containing the shock-diffusing mechanisms, especially those related to phenomena such as trade imbalances, portfolio investment, cross-border banking, population ageing, and income and wealth inequality.Less
Why are there so many crises in the world? Is it true that the global system is today riskier and more dangerous than in past decades? Do we have any tools at our disposal to bring these problems under control, to reduce the global system’s proneness to instability? These are the tantalizing questions addressed in this book. Using a variety of demographic, economic, financial, social, and political indicators, the book demonstrates that the global system has indeed become an “architecture of collapse” subject to a variety of shocks. An analysis of the global financial crisis of 2008, the bilateral relationship between the U.S. and China, and the European sovereign debt crisis illustrates how the complexity and tight coupling of system components creates a situation of precarious stability and periodic disruption. This state of affairs can only be improved by enhancing the shock-absorbing components of the system, especially the capacity of states and governments to act, and by containing the shock-diffusing mechanisms, especially those related to phenomena such as trade imbalances, portfolio investment, cross-border banking, population ageing, and income and wealth inequality.
Mauro F. Guillén
- Published in print:
- 2015
- Published Online:
- November 2015
- ISBN:
- 9780199683604
- eISBN:
- 9780191763267
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199683604.003.0007
- Subject:
- Business and Management, Finance, Accounting, and Banking, Organization Studies
The evolution of the global system and its subcomponents over the last six decades can be traced in terms of complexity and coupling. Financial companies, and the financial sector as a whole, have ...
More
The evolution of the global system and its subcomponents over the last six decades can be traced in terms of complexity and coupling. Financial companies, and the financial sector as a whole, have become more complex and coupled, even in spite of the correction of 2008. The most important bilateral relationship in the world, that between China and the U.S., and the most complex trade bloc, the European Union, have become enormously complex, though not excessively coupled. By contrast, the Euro Zone is the world’s most complex and tightly-coupled subsystem. The overall global system has also evolved towards that extreme. As a result, disruptions, shocks, and crises have proliferated. The global system can only be made safer if the internal complexity of countries through democratic checks and balances, and state capacity, works to prevent the forces of network complexity and coupling from spelling disaster.Less
The evolution of the global system and its subcomponents over the last six decades can be traced in terms of complexity and coupling. Financial companies, and the financial sector as a whole, have become more complex and coupled, even in spite of the correction of 2008. The most important bilateral relationship in the world, that between China and the U.S., and the most complex trade bloc, the European Union, have become enormously complex, though not excessively coupled. By contrast, the Euro Zone is the world’s most complex and tightly-coupled subsystem. The overall global system has also evolved towards that extreme. As a result, disruptions, shocks, and crises have proliferated. The global system can only be made safer if the internal complexity of countries through democratic checks and balances, and state capacity, works to prevent the forces of network complexity and coupling from spelling disaster.
