Arithmetic is absolute: euro area adjustment
Wolff, Guntram. The European Central Bank’s monetary policy targets the euro-area average inflation rate. By setting conditions for the area as a whole it should ensure symmetric price adjustment. Indeed, consumer price inflation rates provide little evidence of asymmetric adjustment during 2009-11. Only Ireland, which is too small to trigger a symmetric reaction, had significantly […]
Why I can still believe the Euro will survive, just
Wren-Lewis, Simon. Paul Krugman thinks that Greece will probably leave the Eurozone. It is generally foolish to disagree with PK, and what follows is a huge hostage to fortune, but here goes. It is clear that Greece wants to stay in the Euro. Their people do and so do most political parties, including Syriza. Their […]
‘Grexit’: Who would pay for it?
Alcidi, Cinzia, Giovannini, Alessandro & Gros, Daniel. The eurozone countries are currently sitting on an aggregate exposure to Greece exceeding €300 billion. If the country were to exit the eurozone, it would certainly not be able to service its debt in the short run when the exchange rate overshoots. Over the longer run, however, the exchange […]
Is the Euro Ending or Beginning?
Pisani-Ferry, Jean. When the architects of the euro started drawing up plans for its creation in the late 1980’s, economists warned them that a viable monetary union required more than an independent central bank and a framework for budgetary discipline. Study after study emphasized asymmetries within the future common-currency area, the possible inadequacy of a […]
American Lessons (for Europe)
Acemoglu, Daron, Robinson, James. Thomas J. Sargent’s Nobel Prize lecture, “United States Then, Europe Now,” draws an important parallel between the United States – the Articles of Confederation of 1781 and the ratification of the U.S. Constitution in 1788 – and Europe today. In both cases, polities were joined in a currency union under the […]
Who is Responsible for the Greek Tragedy?
El-Erian, Mohamed. Greece is following the road taken by several other crisis-ridden emerging economies over the past 30 years. Indeed, as I argued earlier this year, there are stunning similarities between this once-proud eurozone member and Argentina prior to its default in 2001. With an equally traumatic implosion – economic, financial, political, and social – […]
The Eurozone crisis: Fiscal fragility, external imbalances, or both?
Alessandrini, Pietro, Fratianni, Michele, Hughes Hallett, Andrew & Presbitero, Andrea. Unsustainable debt along Europe’s periphery is bringing the euro to breaking point. But this column argues that this is not simply the result of fiscal ill-discipline. After 2010, the Eurozone crisis went from a fiscal crisis to a balance-of-payments crisis – with different prescriptions for policy. Πηγή: […]
Greece’s predicament: Lessons from Argentina
Kretzmer, Peter, Levy, Mickey. Greece’s economic and financial crisis is quickly deteriorating and there is no strategy – or even a coalition government – to figure out what to do next. This column looks at the lessons from Argentina’s default in 2001 and argues that Greece’s road to necessary economic reforms, fiscal sustainability and recovery […]
Let’s Toast The Greek Bailout
Dalton, Matthew. Greece still needs its international creditors from the euro zone and the International Monetary Fund, but it needs them much less than when its now-despised bailout program began in 2010. How so? The IMF and the European Commission, the EU’s executive arm, project that Greece’s primary deficit – that’s the government deficit excluding […]
The impossible hope of an end to austerity
Wyplosz, Charles. With French and Greek voters rejecting austerity, politicians are once again taking the government spending debate seriously. This column argues that the voters are right – it is a bad idea to tighten fiscal policy when growth is so feeble. But the column adds that, wherever one looks, the road away from austerity […]