In the euro zone, two groups of countries according to their preference for the present

Some euro-zone countries (France, Italy) have a strong preference for the present: they have fiscal deficits, they want a short-term boost to demand and income and reject internal devaluations as a way of raising competitiveness. Other euro-zone countries (Germany, Spain since the crisis) have a weak preference for the present: they are reducing (or even eliminating) their fiscal deficits and have carried out internal devaluations. First, we note that this split does not correspond to the usual split between the core and the periphery. For those countries that have a strong preference for the present (a high discount rate), the euro zone’s interest rate is very low, which must encourage them even more to borrow and gives rise to a risk of financial imbalance . F or those countries with a weak preference for the present (a low discount rate), the euro zone’s interest rate is not abnormally low and the use of debt can be expected to be lower.