Can Spain and Italy export their way out of trouble?
Dadush, Uri, Wyne, Zaahira. For many, the origin of the Eurozone crisis is a lack of competitiveness among the periphery countries. This column looks at Spain and Italy and argues that in order to emerge from crisis, they must rely less on domestic demand and more on their tradable sector. Πηγή: Voxeu πλήρες κείμενο
Cleaning up the mess: Bank resolution in a systemic crisis
Gros, Daniel, Schoenmaker, Dirk. In Greece, the problem is an insolvent government bringing down the banks. In Spain, the problem is now insolvent banks bringing down the government. This column argues that despite their differences, the potential costs to the rest of Europe mean that both problems require a European solution. Πηγή: Voxeu πλήρες κείμενο
What History Can Explain About Greek Crisis
Bennhold, Katrin. The decision to suspend Greece from the common currency became inevitable when it emerged that Athens had fiddled with the accounts yet again amid chronic economic weakness, forfeiting what credibility in the international arena it still had left. Πηγή: The New York Times πλήρες κείμενο
Euro Bonds With Strings Are Europe’s Best Way Forward
Crook, Clive. Whether Greece keeps the euro or abandons it, the European Union must strengthen its defenses against a wider attack on its monetary system, and soon. This will inevitably require steps toward fiscal union. Yet popular support for deeper political integration in the EU, never high to begin with, is lower than it has […]
Spain’s Banking Rescue Should Become Example for Europe
Europe’s leaders can’t save their currency union without figuring out a way to salvage the region’s banks. Spain is a perfect place to start. Perhaps no country better illustrates the mutually reinforcing links among the euro area’s banking, sovereign-debt and economic crises than Spain. Its banks are largely paralyzed amid concerns about heavy losses on […]
An Argentine Guide to the Greek Crisis
Velasco, Andres. Policymakers in Europe seem to be surprised at the ongoing bank run in Greece (and the nascent run in Spain). They should not be. Anyone familiar with emerging-market meltdowns knows that a financial crisis nearly always follows a fiscal crisis. Πηγή: Project Syndicate πλήρες κείμενο
The fiscal economics of a Greek exit
Gros, Daniel. If Greece leaves the Eurozone, many expect that it that will be forced to default. This column argues that need not be the case. How much would Greece’s creditors lose if the country were to exit the Eurozone? Πηγή: Voxeu πλήρες κείμενο
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 […]