Italy's new Five Star Movement/League government has been assuring financial markets that its intentions with respect to the euro and EU fiscal rules are pure. But soothing words will not change the fact that Italy is beset by political and economic crises that could plunge it – and Europe – into the abyss.
The Rhone River Valley in southern France is a storybook marriage of high technology, traditional vineyards and ancestral villages. High-speed trains and well-designed toll roads, crisscross majestic cathedrals, castles and chateaus.
Euroscepticism is on the rise across Europe, as populists from both the left and right hold up their retrograde visions of gloriously assertive and blissfully self-reliant nation states. The installation of a populist and eurosceptic government in Italy in recent weeks, after months of political wrangling, is just the latest episode of this saga.
At the time Italy joined the European Monetary Union (EMU) in 1999 on its way to full-fledged membership in the eurozone in January 2002, economists debated whether this never-tried-before experiment will succeed or not.
Recent deviations from sound, rules-based monetary policy have led to an uneven economic recovery. The Federal Reserve should return to a rules-based monetary policy in order to promote economic growth and stability.
The Working Group on Economic Policy brings together experts on economic and financial policy to study key developments in the U.S. and global economies, examine their interactions, and develop specific policy proposals.