An immediate solution for the euro area crisis: A Grand European Investment Plan

After the double crisis that hurt the Eurozone (with the two recessions in 2008-09 and 2012-13), the financial situation has improved, especially thanks to the battery of unconventional measures undertaken by the European central bank. However, even in the recovery period, real economic growth has been weak and uneven in the euro area; above all, the general economic and social situation is still unsatisfactory. In some peripheral Eurozone countries, the fall in aggregate demand and the collapse of investment (especially public investment) are far from being recovered. A possible solution is therefore – waiting for the reforms needed for the “completion” of the European monetary union – the realization of a Grand European Investment Plan, along the lines proposed by Marelli and Signorelli (2017a) and by Della Posta et al. (2018). This plan can stimulate both current and medium term GDP growth; moreover, it can contribute to the stabilization of both public debt as a ratio of GDP and interest rates. It might even help in the restoration of a pro-European sentiment, which lately has been fading away because of the growth-depressing fiscal austerity policies followed in many euro area countries and the consequent dreadful social conditions.