Morning Must-Read: Luigi Guiso, Paola Sapienza and Luigi Zingales: Monnet’s Error?

Luigi Guiso, Paola Sapienza and Luigi Zingales: Monnet’s Error?: “Do partial steps toward European integration generate support for further steps…

…or do they create a political backlash? We try to answer this question by analyzing the cross sectional and time series variation in pro-European sentiment in the EU 15 countries. The two major steps forward (the 1992 Maastricht Treaty and the 2004 enlargement) seem to have reduced the pro-Europe sentiment as does the 2010 Eurozone crisis. Yet, in spite of the worst recession in recent history, the Europeans still support the common currency. Europe seems trapped in catch-22: there is no desire to go backward, no interest in going forward, but it is economically unsustainable to stay still.

My comment:

I just wanted to push back a little against the claim that the Eurocrisis was an unexpected perfect storm, and praise Pierre-Olivier Gourinchas and even more Marty Feldstein for warning us of this fifteen years ago, but I won’t because I think Mervyn King’s should be the last word here.