Rapid current-account rebalancing in the southern Eurozone
Auer, Raphael. Recent data show that the current-account deficits of Greece, Italy, Spain, and Portugal have improved at a rapid pace and are actually close to being balanced. This column reviews recent research that shows this adjustment has been remarkably fast. Compared to mid-2008, these four nations have switched expenditures at a rate that is […]
Did the euro kill governance in the periphery?
Fernández-Villaverde, Jesús, Garicano, Luis & Santos, Tano. By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the […]
Should Germany Exit the Euro?
Sinn, Hans-Werner. Last summer, the financier George Soros urged Germany to agree to the establishment of the European Stability Mechanism, calling on the country to “lead or leave.” Now he says that Germany should exit the euro if it continues to block the introduction of Eurobonds. Πηγή: Project Syndicate πλήρες κείμενο
Europe’s growth problem (and what to do about it)
Darvas, Zsolt, Pisani-Ferry, Jean, Wolff, Guntram. The issue: The European Union’s pre-crisis growth performance was disappointing enough, but the performance has been even more dismal since the onset of the crisis. Weak growth is undermining private and public deleveraging,and is fuelling continued banking fragility. Persistently high unemployment is eroding skills, discouraging labour market participation and undermining […]
Three New Lessons of the Euro Crisis
Subramanian, Arvind. While some observers argue that the key lesson of the eurozone’s baptism by fire is that greater fiscal and banking integration are needed to sustain the currency union, many economists pointed this out even before the euro’s introduction in 1999. The real lessons of the euro crisis lie elsewhere – and they are […]
Comparing Unemployment During the Great Depression and the Great Recession
Black, William Βarry Eichengreen’s and Tim Hatton’s January 1988 paper entitled “Interwar Unemployment in International Perspective” is a useful starting point for any effort to compare unemployment during the Great Depression and the Great Recession. It is useful to begin by recognizing three related cautions that the authors make in that paper. First, the modern […]
Europe’s Procrustean Nightmare
Henkel, Hans-Olaf. The European Union’s policy of saving the euro at all costs is enough to guarantee the euro’s survival. But is preserving the “one-size-fits-all” euro really worth sacrificing the eurozone’s competitiveness and, ultimately, European solidarity? Πηγή: Project Syndicate πλήρες κείμενο
The Meaning of Cyprus
Gros, Daniel. The root of the problem in Cyprus is well known. Its two major banks had attracted huge deposits from abroad, largely from Russia, and presumably mostly from individuals who wished to escape scrutiny at home or elsewhere. The proceeds were then invested in Greek government bonds and loans to Greek companies. When Greece […]
One Size Fits None
Krugman, Paul. In today’s Business Insider, Joe Weisenthal reports on Europe’s truly dismal PMIs (survey-based indexes that act as early-warning indicators for official economic data). There’s no doubt at all that the continent is falling deeper into recession, even in the core countries. And reading this news reminds me of something I’ve been meaning to […]
Large banks relative to GDP: is there a risk beyond Cyprus?
Darvas, Zsolt. Are other EU countries with large bank balance sheet relative to GDP also running a risk similar to Cyprus? The answer is no. The major reason for the banking troubles in Cyprus is the massive losses that the two biggest banks have suffered. Πηγή: Bruegel πλήρες κείμενο