Is external adjustment working in the euro area?
Wolff, Guntram. In the sixth year of the crisis of the euro area, it is time to review whether adjustment to external imbalances in the euro area is working. Current accounts have dramatically adjusted in a number of countries of the euro area as the graph below shows. The one country showing virtually no adjustment […]
European imbalances
Sinn, Hans-Werner, Valentinyi,Akos. Will addressing large internal imbalances lead us out of the Eurozone crisis? This column argues that it might. Periphery countries should devalue in order to regain competitiveness and reduce imbalances. As to whether they should pursue internal or external devaluation, the answer remains unclear. Overall, given that policymakers have excluded the option of exit, […]
European labour-market reform
Driffill, John. How do we solve worryingly high unemployment across Europe? In a time of crisis, would reform actually exacerbate unemployment? This column argues that labour markets – especially in southern Europe – have to be reformed, presenting policy prescriptions to that effect. If we are to break the back of sluggish labour markets, policymakers […]
It’s Frankfurt that should be your worry – not Rome
This week investors have been spooked by the election outcome in Italy, but frankly speaking is there anything new in that shady characters are doing well in an Italian election? Is there anything new in a hung parliament in Italy? Nope, judging from post-WWII Italian political history this is completely normal. Ok, Italian public finances […]
Is a monetary union without fiscal/political union doomed?
This seems to be a very common view at the moment. The view that the Eurozone will have to move to fiscal union, which implies some form of political union, comes from two directions. 1) Those working in the political unions that are the United States or the United Kingdom, know combined monetary and fiscal […]
Policy-related uncertainty: At the root of the lost resilience of Eurozone labour markets?
Arpaia, Alfonso, Turrini,Alessandro. Is policy-related uncertainty at the root of lacklustre Eurozone job creation? This column presents evidence that is consistent with this idea. The main implications for policy are straightforward: credible solutions to the Eurozone debt crisis will alleviate the critical unemployment situation of a number of Eurozone countries. How? Not only by helping […]
The Euro’s House Divided
Pisani-Ferry, Jean. The European Commission’s latest economic outlook paints a disheartening picture: unemployment rates close to or above 5% in Austria, Germany, and the Netherlands in 2014, but above 25% in Greece and Spain and roughly 15% in Ireland and Portugal. In the same year, per capitaGDP is expected to be almost 7% above its […]
Austerity for all?
Jens Weidmann, president of the German Bundesbank, warns of currency wars, according to a FT article: ‘Whether intended or not, one consequence could be the increased politicisation of the exchange rate,” he said, according to a text of his speech provided by the Bundesbank. “Until now the international monetary system got through the crisis without […]
Austerity needed to start, now we need a fiscal union
Wolff, Guntram. The main driver of public debt increases in the last 4 years has been high public deficits, not austerity. Budget consolidation is necessary to avoid excessive increases in debt levels. The central question is about the best moment to pursue the adjustment. I provide a simple scenario analysis, which suggests that fiscal adjustment […]
Winners of a European banking union
Schoenmaker, Dirk, Siegmann, Arjen. So far, discussions around Europe’s prospective banking union have focused only on the supervision of banks. This column argues that policymakers must also think about the resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority could incorporate domestic and […]