Europe's nations and regions

Margarita Katsimi, Gylfi Zoega, 19 November 2015

Iceland and Greece were both seriously affected by the Global Crisis, yet their experiences with the implemented IMF programmes have been quite different. In Iceland the programme has been a success, whereas the one in Greece has been a failure. This column explains why this happened. First, Iceland’s external debt was de jure private, while Greece’s external debt was sovereign debt. Second, Iceland has its own currency, making it easy to create a current account surplus through a lower exchange rate. Finally, the government of Iceland took full ownership of the IMF programme, which was not the case in Greece.

The Editors, 17 November 2015

The IMF, together with CEPR and the Central Bank of Ireland, put on a conference that drew lessons from Ireland’s bailout package titled “Ireland: Lessons from its Recovery from the Bank-Sovereign Loop”. This column summarises the contributions by Eichengreen, Fatás and Schoenmaker, as well as panel comments by Christine Lagarde, Benoît Coeuré, Michael Noonan, and Valdis Dombrovskis. 

Daniel A. Dias, Mark L. J. Wright, 13 November 2015

Measured as a percentage of its GDP, Greece’s debt is higher than that of Portugal and Ireland. This column discusses a range of new techniques for measuring the debts of Greece, Ireland, and Portugal. It argues that plausible alternative measures of indebtedness suggest that Greece is anywhere from as much as 50% more indebted than Portugal and Ireland to as little as half as indebted. The most reasonable measures imply that Greece is far less indebted than is commonly reported.

Çağatay Bircan, Ralph De Haas, Hans Peter Lankes, Alexander Plekhanov, 10 November 2015

In the wake of the Global Crisis, emerging Europe has experienced a sharp drop in investment levels. As a result, income convergence has virtually come to a halt. This column presents key findings of the EBRD’s latest Transition Report, urging countries in emerging Europe to rebalance their financial systems in order to reignite economic growth. Rebalancing is necessary in terms of the available debt–equity mix, the currency composition of credit, banks’ funding sources, and cross-border investment partners.

Mouhamadou Sy, 09 November 2015

From the introduction of the euro in 1999 to the Greek crisis in 2010, the Eurozone witnessed external imbalances between countries at its core and those at its periphery. These imbalances have been attributed either to differences in competitiveness or to the effect of financial integration. This column argues that in order to understand the imbalances within the Eurozone, it is necessary to consider credit costs and capital flows. The lower real cost of credit for high-inflation countries must be taken into account, as well as the inflow of capital to the non-tradable sector that this implies. Monetary policy cannot be conducted in a ‘one size fits all’ manner.

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