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‘Moralistic tale about the euro crisis not quite fair’

26 September 2019
Niels Gilbert
Niels Gilbert

PhD Candidate Niels Gilbert investigated the fundamental causes of the euro crisis and the effects of the much-discussed ‘Outright Monetary Transactions’ (OMT) programme of the European Central Bank (ECB), through which government bonds can be purchased. The OMT programme was perhaps the most important monetary measure to curb the crisis. Gilbert shows that, during the euro crisis, interest rates in one country were partially driven by events in other countries – and that interest rate fluctuations were, therefore, not only a reflection of the health of a country’s domestic economy. ‘My findings illustrate that a moralistic tale about the causes of the euro crisis, based on vice versus virtue, is not quite fair,’ says Gilbert. He will be awarded a PhD by the University of Groningen on 10 October.

During the euro crisis, national interest rates sharply rose in many European countries. Gilbert demonstrates that contagious effects played a major role in this: domestic events in Spain and Italy had a large impact on sovereign yields in other European countries. After ECB President Mario Draghi’s promise to do ‘whatever it takes’ to save the euro, these contagious effects disappeared and the euro zone greatly gained in stability. The ECB therefore had an enormous influence on the restoration of the stability of the euro zone, Gilbert concludes.


Many of the imbalances between northern and southern Europe that appeared during the euro crisis were the consequences of the sharp fall in interest rates that occurred in southern Europe after the introduction of the euro. Developments such as the rapid wage increases in the South mainly followed from the fall in interest rates and were not an independent cause of the crisis, concludes Gilbert. The crisis also does not appear to have depended so much on the alleged poor budgetary discipline in southern Europe.

Adverse effects

Gilbert also concludes that the European fiscal rules have led to adverse effects, such as endeavours to make the budget situation seem more rosy than it was. Nevertheless, on average, these rules were complied with reasonably well. Recommendations to reduce the budget deficit generally led to budget cuts.

More information

The complete PhD thesis is available on our website: Monetary and fiscal integration in Europe

Last modified:31 January 2023 10.24 a.m.
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