The Eurozone conundrum: inability to discern sunk costs from marginal cost of hesitation?

Malović, Marko (2015) The Eurozone conundrum: inability to discern sunk costs from marginal cost of hesitation? In: New еconomic policy reforms. Belgrade Banking Academy, Belgrade, pp. 169-181. ISBN 978-86-7852-036-5

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Abstract

This paper throws additional light at the genesis, true causes and inevitable consequences as well as at the present moment of the Eurozone crisis. Building on my previous work, I argue that political deliberations and macroeconomic ignorance dominate and misguide public policy discourse within EMU. Inability of decision makers to discern sunk costs of the Eurozone crisis from the marginal cost of further hesitation, wasted precious time, money and whatever solidarity potential was there at the onset of it, making some mutualisation of sovereign liabilities inexorable if EMU were to survive in its current size. Paper explains why grassroots of the Eurozone conundrum reside in the EMU’s Core, even though troubles initially appeared to be entirely with the EMU’s Periphery. After debunking stubbornly advertised myth with regard to what’s amiss in the Eurozone, I pinpoint crucial mistakes in the EMU’s macroeconomic response. Unfortunately, due to the rising marginal cost of hesitation, even if proper macroeconomic mix were to be deployed, some sovereign debts in the Eurozone would probably have to be forgiven.

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