This article aims to analyze the causes of external debt crisis in the eurozone within the framework of conventional theories and post-Keynesian macroeconomic theory. The conventional theories employed to explain the crisis of European Monetary Union (EMU) are neo-classical economic theory and classical and modern versions of Optimum Currency Areas (OCA). The strengthening of institutional design of EMU against economic shocks and implementing proper policies to exit from the recession depend on the correct diagnosis of causes of the crisis. This paper argues that modern OCA literature does not have a suitable and sufficient theoretical framework to explain and predict EMU crisis except Krugman specialization hypothesis. However, post-Keynesian economists argue that the major reasons of eurozone crisis are neo-liberal design faults of EMU and neo-liberal policies that weaken aggregate demand generation process through growing inequality in distribution of income.
Key words: Eurozone Crisis, Conventional Theories, Neo-liberalism, Post-Keynesian Theory. JEL Classification: E02, E12, E13, F33, F34. Article Language: EnglishTurkish
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