The different macroeconomic adjustment dynamics in Spain – a member of a monetary union – and the UK – a stand-alone country – is stark. Paul Krugman popularised this contrast in his New York Times blog with the title “The Pain in Spain” (Krugman 2009, 2011), and commented on my own analysis in De Grauwe (2011).
Revisiting the pain in Spain
Paul De Grauwe, 7 July 2014
Topics: Europe's nations and regions, Global crisis, Macroeconomic policy
Tags: austerity, currency depreciation, ECB, EMU, euro, EZ crisis, fiscal policy, government debt, monetary policy, monetary union, Outright Monetary Transactions, Spain, UK
The euro crisis: Muddling through, or on the way to a more perfect euro union?
Joshua Aizenman, 3 July 2014
The short history of the Eurozone has been remarkable and unprecedented – the euro project has moved from the planning board to a vibrant currency within less than ten years.
Delivering the Eurozone ‘Consistent Trinity’
Marco Buti, Maria Demertzis, João Nogueira Martins, 30 March 2014
As argued in an earlier commentary, the financial crisis exposed important economic inconsistencies in the way that EMU operated.1 Although progress has been made, the reality is that more needs to be done.
Topics: Europe's nations and regions, Macroeconomic policy
Tags: banking union, debt, EMU, euro, eurozone, Eurozone crisis, fiscal consolidation, fiscal policy, imbalances, internal devaluation, Stability and Growth Pact, structural reforms
Considering QE, Mario? Buy US bonds, not Eurobonds
Jeffrey Frankel, 24 March 2014
The ECB should further ease monetary policy. Inflation at 0.8% across the Eurozone is below the target of ‘close to 2%’, and unemployment in most countries is still high. Under the current conditions, it is hard for the periphery countries to bring their costs the rest of the way back down to internationally competitive levels as they need to do.
TARGET balances, Bretton Woods, and the Great Depression
Michael Bordo, 21 March 2014
During the Eurozone crisis, an analogy was made between the events in Europe between 2007 and 2012 and the collapse of the Bretton Woods System between 1968 and 1971. There has been a build-up of TARGET liabilities since 2007 by some central banks (notably Greece, Ireland, Portugal, and Spain, or the ‘GIPS’), and of TARGET assets by Germany and others.
A fiscal shock absorber for the Eurozone? Lessons from the economics of insurance
Daniel Gros, 19 March 2014
Even before the euro crisis started, it had been widely argued that the Eurozone needed a mechanism to help countries overcome idiosyncratic shocks. The experience of the crisis itself seemed to make this case overwhelming, and throughout the EU institutions it is now taken for granted that the Eurozone needs a system of fiscal shock absorbers.
The euro in the 'currency war'
Agnès Benassy-Quéré, Philippe Martin, 6 February 2014
CEPR Policy Insight No.69 is available to download free of charge here.
A looser monetary policy will favour a weaker euro and a stronger economy
Agnès Benassy-Quéré, Pierre-Olivier Gourinchas, Philippe Martin, Guillaume Plantin, 6 February 2014
Since July 2012, the euro appreciated more than 10% against the dollar, 6% against the pound sterling, and almost 50% against the yen (IMF 2014). Does this mean that the euro a casualty of a ‘currency war’? We believe the answer is ‘no’. The strength of the euro is the result of an overly restrictive monetary policy by the ECB.
How the euro synchronised EZ cycles
Ayako Saiki, Sunghyun Henry Kim, 2 February 2014
Prior to the introduction of the euro, the topic of whether the Eurozone fulfils the conditions for an optimum currency area was highly debated (e.g. Bayoumi and Eichengreen 1992).
The latest on the dollar’s international currency status
Jeffrey Frankel, 6 December 2013
As most people know, the general trend in the dollar’s role as an international currency has been slowly downward since 1976.
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