Two major narratives are cited when the unfolding of the EMU crisis is described. One view is consistent with the pre-crisis consensus on macroeconomic policy, and with the institutional design of the Eurozone. A second view focuses more on the structural flaws of the single currency, arguing that there never was an optimal currency area. Disentangling the two narratives is hard, but unavoidable, as the policy (and institutional) recipes differ substantially. Francesco Saraceno explains that the policy response and the institutional reforms implemented since 2010 are consistent with one of the two narratives, and he concludes by assessing recent developments in the policy approach, most notably in ECB action.
Francesco Saraceno is deputy department director at the OFCE at Sciences Po in Paris. His research interests range from applied macroeconomics, mostly regarding the European economy, to theoretical models of structural change. Besides European macroeconomics, he studies income distribution and its impact on macroeconomic outcomes. He is in charge of the Economics major of the Master of European Affairs at Sciences Po, where he teaches a class on Advanced Economics of the European Union. He also teaches international macroeconomics at Sciences Po’s School of Public Affairs, and he is on the scientific board of the School of European Political Economy at LUISS in Rome. He is active in the public debate and maintains a blog on European matters.