The euro complements Northern European economies more effectively than those in Southern Europe

Why has the Eurozone crisis affected Southern European countries more severely than Northern European countries? Benedicta Marzinotto writes that it is necessary for monetary and fiscal policies to complement structural factors within an economy, such as labour market institutions. She argues that the transition to the euro created problems for Southern European countries as the single currency’s macroeconomic regime was at odds with some of the structural features of these economies. In contrast, countries like Germany were shielded from these problems because the new system was similar to the previous German model.